The Moreno Company manufactures trendy, high-quality, moderately priced watches. As Moreno's senior financial analyst, you are asked to recommend a method of inventory costing. The chief financial officer (CFO) will use your recommendation to prepare Moreno's 2020 income statement. The following data are for the year ended December 31,2020 : (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. Data table Requirements 1. Prepare income statements under variable and absorption costing for the year ended December 31, 2020. 2. What is Moreno'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