Gammaro Company uses standard costing. Tim Sweeney, the new president of Gammaro Company, is presented with the following data for 2014:

1. At what percentage of denominator level was the plant operating during 2014?
2. How much fixed manufacturing overhead was included in the 2013 and the 2014 ending inventory under absorption costing?
3. Reconcile and explain the difference in 2014 operating incomes under variable and absorption costing.
4. Tim Sweeney is concerned: He notes that despite an increase in sales over 2013, 2014 operating income has actually declined under absorption costing. Explain how thisoccurred.

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Gammaro Company Income Statements for the Year Ended December 31, 2014 Variable Absorption Costing Costing Revenues $9,350,000 $9,350,000 4,695,000 5,855,000 1,350,000 Fixed Fixed manufacturing overhead variances (all unfavorable) Production volume Total marketing and administrative costs (all fixed) Total costs 125,000 405,000 1,570,000 1,570,000 7.740,000 7.955,000 $1,610,000 $1,395,000 ncome Inventories (at standard costs) December 31, 2013 December 31, 2014 $1,345,000 $1,730,000 215,000 45,000