b$.$ Prepare an income statement according to the variable costing concept.

Crazy Mountain Sports Inc.

Variable Costing Income Statement

For the Month Ended March $31$

c$.$ What is the reason for the difference in the amount of operating income reported in $($a$)$ and $($b$)?$

Under the $$ method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under $,$ all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the

$$ income statement will have a higher operating income.