The annual data that follow pertain to Rays, a manufacturer of swimming goggles. $($Rays had no beginning inventories.$)$

$($Click the icon to view the data.$)$

Requirements

Prepare both conventional $($absorption costing$)$ and contribution margin $($variable costing$)$ income statements for Raysfor the year.

Which statement shows the higher operating income? Why? Reconcile the difference between the two statements.

Rays'marketing vice$-$president believes a new sales promotion that costs $$165,000$ would increase sales to $215,000$ goggles. Should the company go ahead with the promotion? Give your reason

Requirement $1.$ Prepare both conventional $($absorption costing$)$ and contribution margin $($variable costing$)$ income statements for Rays for the year.

Begin with the conventional $($absorption costing$)$ income statement. $($For entries with a zero balance, make sure to enter $"0"$ in the appropriate cell.$)$

Data table