The annual data that follow pertain to Aqua Goggles, a manufacturer of swimming goggles (the company had no beginning inventory): (Click the icon to view the data.) Read the requirements. Requirement 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Aqua Goggles for the year. Begin with the conventional (absorption costing) income statement. Aqua Goggles Income Statement (Absorption Costing) For the Year Ended December 31 Less: Less: Operating expenses Now let's prepare the contribution margin (variable costing) income statement for Aqua Goggles for the year. Aqua Goggles Contribution Margin (Variable Costing) Income Statement For the Year Ended December 31 Less: Less: Requirement 2. Which statement shows the higher operating income? Why? Absorption costing operating income is defers $ variable costing operating income. This is because absorption costing of fixed manufacturing overhead as an asset in ending inventory. In contrast, variable costing expenses the fixed manufacturing overhead during the year. Variable costing expenses $ costs during the year, so variable costing operating income is $ than absorption costing income the year. Data table - X Sales price... $ 45 Variable manufacturing expense per unit... $ Sales commission expense per unit ....... S Fixed manufacturing overhead... 20 7 $ 1,980,000 Fixed operating expenses.. $ 250,000 Number of goggles produced.. Number of goggles sold 220,000 198,000 Print Done