Q.2 The White Daddy Company is comparing its present absorption costing practices with direct costing methods. An examination of its record produced the following information: 40.000 units 36,000 $54,000 20,000 10 Maximum plant capacity Normal capacity Fixed FOH Fixed Marketing & Administrative expenses Sales price per unit Standard variable manufacturing cost per unit Variable marketing expenses per unit sold . For the year, the following data are available: Budgeted production Actual production 4 1 Sales 36,000 units 30,000 28,000 1000 $ 5,000 Finished goods inventory, January 1 Unfavorable variance from standard variable manufacturing costs All variances are written off directly at year end as an adjustment to cost of goods sold Required: (Marks 10) 1) Direct Costing Income Statement 2) Operating Income if absorption costing had been used