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Music by Design produces student-grade violins for beginning violin students. The company produced 2,800 violins in its first month of operations. At month-end, 700 finished violins remained unsold. There was no inventory in work in process. Violins were sold for $114.00 each. Total costs from the month are as follows: (Click on the icon to view the data.) The company prepares traditional (absorption costing) income statements for its bankers. Music by Design would also like to prepare contribution margin income statements for his own management use. Requirements Compute the following amounts that would be shown on these income statements: Requirement 1. Gross profit Identify the formula, and then compute the gross profit. = Gross profit Requirement 2. Contribution margin Identify the formula, and then compute the contribution margin. Contribution margin Requirement 3. Total expenses shown below the gross profit line + = Total expenses below the gross profit line Requirement 4. Total expenses shown below the contribution margin line = Total expenses below the contribution margin line Requirement 5. Dollar value ending inventory under absorption costing The dollar value of ending inventory under absorption costing is $ Requirement 6. Dollar value ending inventory under variable costing The dollar value of ending inventory under variable costing is $ Which income statement has a higher operating income? By how much? Explain. The V will have a higher operating income by $Under absorption costing Under variable costing, these costs are Compute the following amounts that would be shown on these income statements: Requirements 1. Gross profit 2. Contribution margin 3. Total expenses shown below the gross profit line 4. Total expenses shown below the contribution margin line 5. Dollar value of ending inventory under absorption costing 6. Dollar value of ending inventory under variable costing Which income statement has a higher operating income? By how much? Explain. Direct materials used. .... $ 136.400 Direct labour 50.000 HAH 32 000 ERRER 70.000 NE Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses 11,000 MANN 13,000