(1-4) (5-9) Sales & !!! !!! !!! !!! & Income before taxes Reconcile the statements of income before taxes based on variable costing and absorption costing. Reported income before taxes - variable costing Difference Reported income before taxes - absorption costingTo: Billy Hanks, Vice President From: Rocky Goodman, Controller Subject: Year 1 income statement Date: 08/02/Year 1 Hello Billy, We have completed the preparation of the income statement for July Year 1. As you know, our firm has just adopted a variable reporting purposes. The statement has been prepared on the variable cost basis. Please see the income statement attached. I also have compiled additional cost information for your reference: The unit sales price for July averaged $36. The standard unit manufacturing costs for the month are the same as those in the beginning inventory. They were Variable cost $18 Fixed cost Total cost $24 The unit rate for fixed manufacturing costs is a predetermined rate based upon a normal monthly production of 150,000 units Production for July was 45,000 units in excess of sales. The inventory at July 31 consisted of 80,000 units. No beginning or ending work-in-process existed. Please let me know if you have any questions. RockyEason Corporation Internal Use Income Statement For the Month of July Year Variable Costing Basis) Sales $3,600,000 Variable standard cost of goods sold (1,800,000) Contribution margin $ 1,800,000 Budgeted fixed manufacturing costs (900,000) Fixed manufacturing cost spending variance O Fixed selling and administrative costs (600,000) Income before taxes 300,000 ON