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 CFO will use your recommendation to prepare Garrard's 2018 statement of comprehensive income. The following data are for the year ended December 31, 2018. (Click the icon to view the data.) Assume standard costs per unit are the same for units in beginning inventory and units produced during the year. Also, assume no price, rate, or efficiency variances. Any production-volume variance is written off to COGS in the month in which it occurs. Required Requirement 1. Prepare statements of comprehensive income under variable and absorption costing for the year ended December 31, 2018. Begin by preparing the statement of comprehensive income under variable costing for the year ended December 31, 2018. Complete the top half of the statement of comprehensive income first, and then complete the bottom portion. (Complete all answer boxes. Use parentheses or a minus sign for an operating loss.) Variable costing Revenues Variable cost of goods sold: Beginning inventory Variable manufacturing costs Cost of goods available for sale Deduct: Ending inventory Variable cost of goods sold Variable operating costs Adjustment for variances Data Beginning inventory, January 1, 2018 Ending inventory, December 31, 2018 2018 sales 88,000 units 34,000 units 293,000 units Selling price (to distributor) 20.00 per unit Variable manufacturing cost per unit, including direct materials $ 5.70 per unit Variable operating (marketing) cost per unit sold $ 1.60 per unit sold Fixed manufacturing costs $ 1,165,600 Denominator-level machine-hours 6,200 units per machine Standard production rate 40 hour Fixed operating (marketing) costs $ 1,050,000 Print Done Required 1. Prepare statements of comprehensive income under variable and absorption costing for the year ended December 31, 2018. 2. What is Garrard's operating income as a 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