$$

Sales (70,000 units) $2,800,000 Production costs (80,000 units): Direct materials. 880,000 Direct labor. Manufacturing overhead: Variable. Fixed Operating expenses: 720,000 544,000 320,000 Variable. 175,000 Fixed 240,000 Depreciation on equipment. 60,000 Real estate taxes. 18,000 Personal property taxes (on inventory and equipment) 28,800 Personnel department expenses 30,000 Required a. Prepare an income statement based on full absorption costing. b. c. Prepare an income statement based on variable costing. If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an insurance claim for the fire loss? Why? Variable and Abeountion Corting Service Company Loncan's Tailoring provide > 102 4. Prepare an Absorption and Variable Income Statement. 5. Check figures: Cost of Good Sold, Absorptionm $2,156,000; Contribution Margin, Variable, $749,000. 6. Please note that the Depreciation on equipment, Real estate taxes, Personnel property taxes, and Personnel department expenses are included in fixed expenses.