The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the year ended December 31:

Line Item Description	(in millions)
Sales	$16,910
Cost of goods sold	$(14,370)
Selling, administrative, and other expenses	(1,520)
Total expenses	$(15,890)
Operating income	$1,020

Assume that $3,680 million of cost of goods sold and $840 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows:

Line Item Description	Amount
Beginning inventory	$2,010
Ending inventory	2,340

Also, assume that 30% of the beginning and ending inventories were fixed costs.

Question Content Area

a. Prepare an income statement according to the variable costing concept for Caterpillar Inc. Round numbers to nearest million.

Line Item Description	Amount	Amount
Contribution marginFixed manufacturing costsSalesVariable cost of goods soldVariable selling and administrative expensesSales		$Sales
Variable cost of goods sold:
Beginning inventory	$Beginning inventory
Manufacturing marginSalesVariable cost of goods manufacturedVariable cost of goods soldVariable selling and administrative expensesVariable cost of goods manufactured	Variable cost of goods manufactured
Contribution marginEnding inventoryFixed manufacturing costsManufacturing marginVariable cost of goods manufacturedEnding inventory	Ending inventory
Manufacturing marginSalesTotal variable cost of goods manufacturedTotal variable cost of goods soldTotal variable selling and administrative expensesTotal variable cost of goods sold		Total variable cost of goods sold
Contribution marginFixed manufacturing costsManufacturing marginVariable cost of goods soldVariable selling and administrative expensesManufacturing margin		$Manufacturing margin
Contribution marginFixed factory overheadManufacturing marginVariable cost of goods soldVariable selling and administrative expensesVariable selling and administrative expenses		Variable selling and administrative expenses
Contribution marginFixed selling and administrative expensesManufacturing marginSalesVariable cost of goods manufacturedContribution margin		$Contribution margin
Fixed costs:
Fixed contribution marginFixed manufacturing costsFixed salesVariable cost of goods manufacturedVariable cost of goods soldFixed manufacturing costs	$Fixed manufacturing costs
Fixed manufacturing marginFixed selling and administrative expensesVariable cost of goods manufacturedVariable cost of goods soldVariable selling and administrative expensesFixed selling and administrative expenses	Fixed selling and administrative expenses
Contribution marginManufacturing marginOperating incomeSalesTotal fixed costsTotal fixed costs		Total fixed costs
Operating incomeOperating lossOperating income		$Operating income