The Lowland Company had the following manufacturing data for the year 2012 (in thousands of dollars): E: (Click the icon to view the data.) Read the requirements. Requirement 1. Prepare two income statements, one using the contribution approach and one using the absorption approach. Begin by preparing the schedule of indirect manufacturing costs subdivided between variable and fixed costs. Lowland Company Schedule of Manufacturing Overhead - X Data table For the Year Ended December 31, 2012 (in thousands of dollars) Variable Costs Beginning and ending inventories None Direct materials used $ 340 Direct labor 310 Supplies 24 Fixed Costs Utilities-variable portion 39 Utilities-fixed portion 19 Indirect labor-variable portion 86 Indirect labor-fixed portion 52 Depreciation 210 Requirements Property taxes 17 Supervisory salaries 61 Total manufacturing overhead 1. Prepare two income statements, one using the contribution approach and one using the Selling expenses were $305,000 (including $76,000 that were absorption approach. Next prepare a contribution income statement. variable) and general administrative expenses were $144,000 2. Suppose that all variable costs fluctuate directly in proportion to sales and that fixed costs Lowland Company (including $27,000 that were variable). Sales were $2.3 million. Direct are unaffected over a very wide range of sales. What would operating income have been labor and supplies are regarded as variable costs. if sales had been $2.2 million instead of $2.3 million? Which income statement did you Contribution Income Statement use to help obtain your answer? Why? For the Year Ended December 31, 2012 (in thousands of dollars) Print Done Print Done Less Sales