The Home Company is an absorption costing system based on standard cost Variable manufacturing cont consists of direct mail cost of 54.00 per und and the variable manufacturing costs of $100 per unt. The Mandard production rate is 10 units per machine hour Total budgeted and acht manufacturing overhead costs are $490,000 Flied manufacturing overhead is allocated at 37 per machine hour based on feed manufacturing costs of $400,000 - 70,000 machine hour, which is the level of man sie denominato level. The sling price $11 per unit Variable operating inonmanufacturing) cost which is driven by units sold, $1 per unit. Foed operating inonmanfacturing costs are 5130,000. Beginning inventory in 2020 is 25.000 uns ending inventory 10.000 units Sale in 2020 nr 620,000 unts. The same standard unit costs persisted throughout 2019 and 2020. For simplicity, some at there are no price, spending reficiency variances Read the guitement Requirement 1. Prepare an income statement for 2020 assuming that the production volume variance is witten off at year-end as an adjustment to cost of goods sold. Complete the top half of the income statement first then complete the bottom portion. Cabut the variance as tumble (F) or unfavorite {U}) Absorption costing 1. Prepare an income statement for 2020 assuming that the production-volume variance is written off at year-end as an adjustment to cost of goods sold. 2. The president has heard about variable costing. She asks you to recast the 2020 statement as it would appear under variable costing, 3. Explain the difference in operating income as calculated in requirements 1 and 2. 4. Graph how fixed manufacturing overhead is accounted for under absorption costing. That is, there will be two lines: one for the budgeted fixed manufacturing overhead (which is equal to the actual fixed manufacturing overhead in this case) and one for the fixed manufacturing overhead allocated. Show the production-volume variance in the grap. 5. Critics have claimed that a widely used accounting system has led to undesirable buildups of inventory levels. (a) Is variable costing or absorption costing more likely to lead to such buildups? Why? (b) What can managers do to counteract undesirable inventory buildups