Whitman Company has just completed its first year of operations. The companys absorption costing income statement for the year appears below:

S 1,622,400 897.000 Whitman Company Income Statement Sales (39,000 units x 541.60 per unit) Cost of goods sold (39,000 units x 523 per unit) Gross margin Selling and administrative expenses Net operating income 725,400 409,500 S 315,900 The company's selling and administrative expenses consist of S292,500 per year in fixed expenses and 53 per unit sold in variable expenses. The $23 per unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead (5188,000 = 47,000 units) Absorption costing unit product cost S 12 5 2 4 $ 23 Required: 1. Prepare the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement Variable expenses Fixed expenses: 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 Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Variable costing net operating income (loss) Absorption costing net operating income (loss)