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: The company is evaluating a proposal to manufacture 28,000 units instead of 24,800 units, thus creating an ending inventory 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 24,800 and 28,000 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank. a. 2. Prepare an estimated income statement, comparing operating resuits if 24,800 and 28,000 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank. b. What is the reason for the difference in operating income reported for the two levels of production by the absorption costing income staternent? The increase in income from operations under absorption costing is caused by the allocation of overhead cost over a 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