Using variable costing and absorbtion costing

The cheif executive officer, of Richards Corp. attended a conference in which one of hte sessions was devoted to variable costing. The CEO was inpressed by the presentation and has asked that that the following data of Richards Corp. be used to prepare comparative statements using variable costing and the companies absorption costing. The data follow:

Direct materials.....$90,000

Direct Laobr ......$ 120,000

Variable facroty overhead.....$ 60,000

Fixed facroty overhead.....$ 150,000

Fixed marketing and admin expenses ....$ 180,000

The factory produced 80,000 units during the period, and 70,000 units were sold for $700,000.

1. Prepare an income statment using variable costing

2. Prepare and income statment using absorbtion costing