P18-41. Absorption and Variable Costing Comparisons Otabo is a shoe manufacturer. Assume the company is concerned with changing to the variable cost- ing method of inventory valuation for making internal decisions. Functional income statements using absorption costing for January and February follow. February OTABO Functional (Absorption Costing) Income Statements For January and February January Sales (10,000 units) $800,000 Cost of goods sold (490,000) Gross profit. .. 310,000 Selling and administrative expenses (235,000) Net operating income. $ 75,000 $800,000 (586,000) 214,000 (235,000) $ (21,000) Production data follow. Production units Variable costs per unit Fixed overhead costs ..., 12,000 $25 $288,000 8,000 $25 $288,000 The preceding selling and administrative expenses include variable costs of $2 per unit sold. Required a. Compute the absorption cost per unit manufactured in January and February. b. Explain why the net operating income for January was higher than the net operating income for February when the same number of units was sold in each month. c. Prepare contribution income statements for both months using variable costing. d. Reconcile the absorption costing and variable costing net operating income figures for each month. (Start with variable costing net operating income.)