The Garrard Company manufactures trendy, high-quality, moderately priced watches. As Garrard's senior financial analyst, you are asked to recommend a method of inventory costing. The chief financial officer (CFO) will use your recommendation prepare Garrard's 2020 income statement. The following data are for the year ended December 31, 2020: B (Click the icon to view the data.) (Click the icon to view the assumptions.) Read the requirements, Requirement 1. Prepare income statements under variable and absorption costing for the year ended December 31, 2020. Begin by preparing the income statement under variable costing for the year ended December 31, 2020. Complete the top half of the income statement first, then complete the bottom portion. Variable costing Requirements 1. Prepare income statements under variable and absorption costing for the year ended December 31, 2020. 2. What is Garrard's operating income as percentage of revenues under each costing method? 3. Explain the difference in operating income between the two methods. 4. Which costing method would you recommend to the CFO? Why? Print Done Beginning inventory, January 1, 2020 Ending inventory, December 31, 2020 2020 sales Selling price (to distributor) Variable manufacturing cost per unit, including direct materials Variable operating (marketing) cost per unit sold Fixed manufacturing costs Denominator-level machine-hours Standard production rate Fixed operating (marketing) costs 86,000 units 38,000 units 376,000 units $21.50 per unit $4.90 per unit $1.60 per unit sold $1,478,400 5,600 60 units per machine-hour $1,080,000