Variable and Absorption Costing Summarized data for 2016 (the first year of operations) for Gorman Products, Inc., are as follows:

Sales (75,000 units)					$3,000,000
Production costs (80,000 units)
Direct material					880,000
Direct labor					720,000
Manufacturing overhead:
Variable					544,000
Fixed					320,000
Operating expenses:
Variable					168,000
Fixed					240,000
Depreciation on equipment					60,000
Real estate taxes					18,000
Personal property taxes (inventory & equipment)					28,800
Personnel department expenses					30,000

a. Prepare an income statement based on full absorption costing. Only use a negative sign with your answer for net income (loss), if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable. Absorption Costing Income Statement Sales 300,000X Cost of Goods Sold: Beginning Inventory Direct materials 880,000 Direct labor 720,000 Manufacturing overhead 712,000 X Less: Ending Inventory 688,000 X Cost of Goods Sold 560,000 X Operating expenses + X 46,800x Operating expenses 30,000 423,200X Net Income (Loss) b. Prepare an income statement based on variable costing Only use a negative sign with your answer for net income (loss), if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable. Variable Costing Income Statement Sales 40 X Variable cost of Goods Sold: Beginning Inventoy Direct materials 11 X Direct labor Variable manufacturing overhead 8.9 X Less: Ending Inventory 11.1 X Variable cost of goods sold 832,500X Contribution margin + X 560,000 Contribution margin 272,500 X Fixed costs: Manufacturing overhead 560,000 X Operating expenses 272,500X