Income Statements under Absorption Costing and Variable Costing Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. b. Prepare anjincome statement according to the variable costing concept. Crazy Mountain Sports Inc. Variable Costing Income Statement For the Month Faded Marrh at 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 induded in the cost of goods sold is matched with the revenues. Under 5 all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the armount of inventory change. Thus, when inventory increases, the income statement will have a higher operating income