Prior to the first month of operations ending April 30, 2012, Jadelis Industries Inc. estimated the following operating results:

The company is evaluating a proposal to manufacture 45,000 units instead of 36,000 units, thus creating an ending inventory of 9,000 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.
a. Prepare an estimated income statement, comparing operating results if 36,000 and 45,000 units are manufactured in (1) the absorption costing format and (2) the variable costing format.
b. What is the reason for the difference in income from operations reported for the two levels of production by the absorption costing income statement?

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Sales (36,000 x $124.00) .. Manufacturing costs (36,000 units): Direct materials.. Direct labor..... Variable factory overhead Fixed factory overhead.. Fixed selling and administrative expenses. Variable selling and administrative expenses. $4,464,000 2,736,000 648,000 288,000 360,000 49,000 59,200