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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

Whitman Company has just completed its first year of operations. The companys absorption costing income statement for the year follows:
Whitman Company
Income Statement
Sales (39,000 units \times $40.60 per unit) $ 1,583,400
Cost of goods sold (39,000 units \times $24 per unit)936,000
Gross margin 647,400
Selling and administrative expenses 487,500
Net operating income $ 159,900
The companys selling and administrative expenses consist of $292,500 per year in fixed expenses and $5 per unit sold in variable expenses. The $24 unit product cost given above is computed as follows:
Direct materials $ 10
Direct labor 5
Variable manufacturing overhead 4
Fixed manufacturing overhead ($255,000-: 51,000 units)5
Absorption costing unit product cost $ 24
Required:
Redo the companys income statement in the contribution format using variable costing.
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.

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