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9-35. COMPARISON OF VARIABLE COSTING AND ABSORPTION COSTING. Gammaro Company uses standard costing. Tim St. Germaine, the new president of Gammaro Company, is presented with the following data for 2020: SP 4 Home Insert Page Layout Formulas Data Review View A B 1 Gammaro Company 2 Income Statements for the Year Ended December 31, 2020 3 Variable Absorption Costing Costing 5 Revenues $9,050,000 $9,050,000 6 Cost of goods sold (at standard costs) 4,665,000 5,875,000 7 Fixed manufacturing overhead (budgeted) 1,400,000 8 Fixed manufacturing overhead variances (all unfavorable): 9 Spending 80,000 80,000 10 Production volume 350,000 11 Total marketing and administrative costs (all fixed) 1,560,000 1,560,000 12 Total costs 7,705.000 7.865.000 13 Operating income $1,345,000 $1,185,000 14 15 Inventories (at standard costs) 16 December 31, 2019 $1,465,000 $1,745,000 17 December 31, 2020 75,000 195,000 Required 1. At what percentage of denominator level was the plant operating during 2020? 2. How much fixed manufacturing overhead was included in the 2019 and the 2020 ending inventory under absorption costing? 3. Reconcile and explain the difference in 2020 operating incomes under variable and absorption costing. 4. Tim St. Germaine is concerned: He notes that despite an increase in sales over 2019, 2020 operating income has actually declined under absorption costing. Explain how this occurred