Estimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending October 31 Marshall Inc. estimated the following operating results: Sales (30,400 x $106) $3,222,400 Manufacturing costs (30,400 units): Direct materials 1,939,520 Direct labor 459,040 Variable factory overhead 215,840 Fixed factory overhead 255,360 Fixed selling and administrative expensen 59,500 Variable selling and administrative expenses 84,000 The company is evaluating a proposal to manufacture 33,600 units instead of 30,400 units, thus creating an Inventory, October 31 of 3,200 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. 1. Prepare an estimated Income statement, comparing operating results if 30,400 and 33,600 units are manufactured in the absorption costing format. an amount box does not require an entry leave it blank or enter "O". Marshall Inc. Absorption Costing Income Statement For the Month Ending October 31 30,400 Units Manufactured 13,600 Units Manufactured Cost of goods sold: JL Marshall Inc. Absorption Costing Income Statement For the Month Ending October 31 30,400 Units Manufactured 33,600 Units Manufactured Cost of goods sold: There DDDDDD Qu Income from operations a. 2. Prepare an estimated Income statement, comparing operating results if 30,400 and 33,600 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank or enter "o", Marshall Inc. Variable Costing Income Statement For the Month Ending October 31 30,400 Units Manufactured 33,600 units Manufactured Variable cost of goods sold: Variable costing income statement For the Month Ending October 31 30,400 Units Manufactured 33,600 Units Manufactured Variable cost of goods sold: W0000 0000 Fixed costs: (D) 1000 Total fixed costs 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? The increase in income from operations under absorption costing is caused by the allocation of overhead cost over number of units. Thus, the cost of goods sold is The difference can also be explained by the amount of overhead cost included in the Inventory