The following data were adapted from a recent income statement of The Procter & Gamble Company (PG):

                                                                                                                                                         (in millions)

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 65,058

Operating costs:

Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(32,535)

Marketing, administrative, and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . (18,568)

Total operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(51,103)

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 13,955

Assume that the variable amount of each category of operating costs is as follows:

                                                                                                                                                      (in millions)
Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,500
Marketing, administrative, and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000

a. Based on the data given, prepare a variable costing income statement for Procter & Gamble, assuming that the company maintained constant inventory levels during the period.

b. If Procter & Gamble reduced its inventories during the period, what impact would that have on the operating income determined under absorption costing?