Trasher Ltd produces two grades of sand (x150 and x300) used in the manufacture of industrial abrasive. The results of oeprations last year were as follow:

	x150	x300	Total
Manufacturing	4000 tones	6000 tonnes	10000 tonnes
Sales	3000 tonnes	4000 tonnes	7000 tonnes
Revenues	$90000	$150,000	$240000
Variable manufacuring costs	20000	15000	35000
variable selling costs	15000	20000	$35,000

Fixed manufacuring costs were $100,000 and fixed selling and administrative costs were $60,000. The company held no beginning inventories.

Required:

a./ If Trasher uses a variable costing system, what was the operating income

b./ If Trasher uses absorption costing and allocate actual fixed manufacturing coss to inventory on the basis of actual tons produced. What was the operating income?

c./ Reconcile and explain the difference between your answer to parts (a) and (b)