Aivars Company reports the following variable costing income statement for its single product. This company€™s sales totaled 50,000 units, but its production was 80,000 units. It had no beginning finished goods inventory for the current period.

1. Convert this company€™s variable costing income statement to an absorption costing income statement.
2. Explain the difference in income between the variable costing and absorption costing incomestatement.

AIVARS COMPANY Income Statement (Variable Costing) Sales (50.000 units x $60 per unit). Variable expenses .$3,000,000 Variable manufacturing expense (50,000 units $28 per unir)-.......... 1.400.000 250,000 1650,000 Contribution margin..-a. 1,350,000 Variable selling and admin, expense (50,000 units X $5 per unit). Total variable expenses.. Fixed expenses Fixed selling and administrative expense. Total fixed expenses.. .. 320,000 160,000 480,000 870,000 Net income