Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: whitman company Income Statement Sales (48,600 units X $42.10 per unit) Cost of goods sold (40,000 units * $24 per unit) Gross margin Selling and administrative expenses Net operating income $1,684,000 960, 600 724, 080 460,000 $ 264,000 The company's selling and administrative expenses consist of $300,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $24 unit product cost given above is computed as follows: 3 12 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($255,600 + 51,000 units) Absorption costing unit product cost 5 S24 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above Kedo the company s income statement in the contribution tormat using variable costing. Whitman Company Variable Costing Income Statement Sales 1,684,000 Variable expenses: Indirect labor Variable cost of goods sold Variable selling and administrative X $ 480,000 X 160,000 X 120,000 X 160,000 X 920,000 764,000 Contribution margin Fixed expenses Fixed manufacturing overhead Fixed selling and administrative expense 255,000 300,000 555,000 $ 209,000 Net operating income