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.

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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