Required information Exercise 19-7 Income reporting under absorption costing and variable costing LO P2 (The following information applies to the questions displayed below. Oak Mart, a producer of solid oak tables, reports the following data from its second year of business. 320 per unit 100,000 units 104,000 units 4,000 units $ 540,000 320,000 860,000 $ Sales price per unit Units produced this year Units sold this year Units in beginning-year inventory Beginning inventory costs Variable (4,000 units x $135) Fixed (4,000 units X $80) Total Manufacturing costs this year Direct materials Direct labor Overhead costs this year Variable overhead Fixed overhead Selling and administrative costs this year Variable Fixed 50 per unit 64 per unit $3,400,000 $ 7,400,000 $1,450,000 4,000,000 1. Prepare the current-year income statement for the company using variable costing. X Answer is not complete. OAK MART COMPANY Variable Costing Income Statement Sales 33,280,000 Less: Variable costs Beginning inventory: Variable costs $ 540,000 Manufacturing costs this year Direct materials 5,000,000 6,400,000 Direct labor Variable overhead costs Total variable costs available 11,940,000 Less: Ending finished goods inventory 0 Variable cost of goods sold Variable selling and administrative expenses 1,450,000 Total variable costs available 13,390,000 Total variable costs 14,840,000 Contribution margin 26,780,000 X I Less: Fixed expenses 2. Prepare the current year income statement for the company using absorption costing. OAK MART COMPANY Absorption Costing Income Statement Sales Beginning inventory Manufacturing costs this year Direct materials Direct labor Variable overhead costs Less: Ending inventory Variable selling and administrative expenses Total variable costs Contribution margin Fixed overhead costs Fixed selling and administrative costs I Net income (loss) Net income under variable costing is higher than net income under absorption costing by