S-BI Contribution and Absorption Income Statements year ending December 31, 2009. There were no beginning or ending inventories. The following information is taken from the records of the Kingland Manufacturing Company for the Long-term rent, factory 100,000 Sales Sales commissions Advertising Shipping expenses $13,000,000 500,000 400,000 300,000 Factory superintendent's salary Factory supervisors' salaries Direct materials used 30,000 00,000 4,000,000 2.000,000 60,000 40,000 100.000 800,000 Administrative executive salaries 100,000 Direct labor Cutting bits used Factory methods research Abrasives for machining Administrative clerical salaries (variable) 400,000 Fire insurance on factory equipment Property taxes on factory equipment 2,000 Indirect labor 30000 Depreciation on factory equipment 400,000 1. Prepare a contribution income statement and an absorption income statement. If you are in doub about any cost behavior pattem, decide on the basis of whether the total cost in question will fluc- tuate substantially over a wide range of volume. Prepare a separate supporting schedule of indi- rect manufacturing costs subdivided between variable and fixed costs. 2. Suppose that all variable costs fluctuate directly in proportion to sales, and that fixed costs are unaffected over a wide range of sales. What would operating income have been if sales had becen $12 million instead of $13 million? Which income statement did you use to help get your answer? Why