The Gable Company manufactures trendy, high-quality moderately priced watches. As Gable's senior financial analyst, you are asked to recommend a method of inventory costing. The CFO will use your recommendation to prepare Gable's 2014 income statement. The following data are for the year ended December 31,2014:

Beginning inventory, January 1, 2014: 90,000 units

Ending inventory, December 31, 2014: 32,000 units

2014 sales: 429,000 units

Selling price (to distributor): $21.00 per unit

Variable manufacturing cost per unit, including direct materials: $5.20 per unit

Variable operating (marketing) cost per unit sold: $1.00 per unit sold

Fixed manufacturing costs: $1,766,400

Denominator-level machine-hours: 6,400

Standard production rate 60units per machine-hour

Fixed operating (marketing) costs: $1,050,000

1.	Prepare income statements under variable and absorption costing for the year ended December 31, 2014.
2.	What is Gable's operating income as percentage of revenues under each costing method?