On July 31, the end of the first month of operations, Rhys Company prepared the following income statement, based on the absorption costing concept:

a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $132,000 and the variable selling and administrative expenses were $115,200.
b. Reconcile the absorption costing income from operations of $1,656,000 with the variable costing income from operations determined in (a).

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$4,440,000 Sales (96,000 units). Cost of goods sold: Less ending inventory (24,000 units) 624,000 2,496,000 $1,944,000 288,000 $1,656,000 Gross profit Selling and administrative