Whirlpool Corporation had the following abbreviated income statement for a recent year: (in millions)

Net sales ..................$19,408

Cost of goods sold .............. 16,517

Selling administrative and other expenses ...... 1,736

Total expenses ...............$18,253

Income from operations ............ $1,155

Assume that there were $4,250 million fixed manufacturing costs and $1,000 million fixed selling, administrative, and other costs for the year. The finished goods inventories at the beginning and end of the year from the balance sheet were as follows:

January 1 .............$2,350 million

December 31 ............$2,660 million

Assume that 30% of the beginning and ending inventory consists of fixed costs. Assume work in process and materials inventory were unchanged during the period.

a. Prepare an income statement according to the variable costing concept for Whirlpool Corporation for the recent year.

b. Explain the difference between the amount of income from operations reported under the absorption costing and variable costing concepts.