Assume the same facts as in the preceding problem In
Assume the same facts as in the preceding problem. In addition, consider the following actual data for 20X1:
Direct materials ...... $ 262,000
Direct labor ......... 171,000
Variable factory overhead ... 38,000
Fixed factory overhead .... 143,500
Selling and administrative costs
Variable .......... 165,100
Fixed ........... 83,000
Sales ........... 1,252,400
1. For 20X1, prepare income statements based on standard variable (direct) costing and standard absorption costing.
2. Explain why operating income differs between variable costing and absorption costing. Be specific.

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