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

Whitman Company

Income Statement

Sales $(38,000$ units $\backslash$times $$42\mathrm{.}10$ per unit$)$ $ $1,599,800$

Cost of goods sold $(38,000$ units $\backslash$times $$22$ per unit$)836,000$

Gross margin $763,800$

Selling and administrative expenses $399,000$

Net operating income $ $364,800$

The company$$s selling and administrative expenses consist of $$285,000$ per year in fixed expenses and $$3$ per unit sold in variable expenses. The $$22$ per unit product cost given above is computed as follows:

Direct materials $ $11$

Direct labor $5$

Variable manufacturing overhead $2$

Fixed manufacturing overhead $($$$212,000-$: $53,000$ units$)4$

Absorption costing unit product cost $ $22$

Required:

$1.$

Prepare 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.