er 19-Direct Costing and the Contribution Margin Chapter 605 (3) Compute and reconcile the difference in operating income under absorption costing and direct costing for the current year 19-5. Absorption costing vs. direct costing. Maxumm following standard unit costs at 100% of its normal production ca units per year Corporation developed the pacity, which is 50,000 Direct materials S2 Direct labor Variable factory overhead Fixed factcry overhead.. S8 The selling price of each unit of product is $15. Variable commercial expenses are $1 per unit sold and fixed commercial expenses total $100.000 for the period. During the year, 52,000 units were produced and 49,000 units were sold. There are no work in process beginning or ending inventories, and finished goods inventory is maintained at standard cost, which has not changed from the preceding year. For the current year, there is a net unfavorable variable cost variance in the amount of $1,000. Required: (1) Prepare an income statement on the absorption costing basis. (2) Prepare an income statement on the direct costing basis. (3) Compute and reconcile the difference in operating income for the current yea under absorption costing and direct costing