Smith Company uses standard costing. Tim Berkner, the new president of Smith Company, is presented with the following data for 2020: (Click the icon to view the data.) Data table 1 2 3 4 Revenues Smith Company Income Statements for the Year Ended December 31, 2020 5 Cost of goods sold (at standard costs) 6 Fixed manufacturing overhead (budgeted) Fixed manufacturing overhead variances (all 7 unfavorable): Variable Costing Absorption Costing $ 8,950,000 $ 8,950,000 4,705,000 1,250,000 5,845,000 0 8 Spending 9 Production volume 10 Total marketing and administrative costs (all fixed) 11 Total costs 12 Operating income 13 Inventories (at standard costs) 14 December 31, 2019 15 December 31, 2020 115,000 115,000 0 400,000 1,540,000 1,540,000 7,610,000 7,900,000 $ 1,340,000 $1,050,000 $ 1,320,000 $ 1,740,000 50,000 180,000