Variable and Absorption Costing Summarized data for 2016 (the first year of operations) for Gorman Products, Inc., are as follows: Sales 75,000 units) $9,000,000 Production costs (80,000 units) Direct material 2,640,000 Direct labor 2,160,000 Manufacturing overhead: Variable 1,632000 Fixed 960,000 Operating expenses Vanable 504,000 Fixed 720,000 Depreciation on equipment 180,000 Real estate taxes 54,000 Personal property taxes (inventory & equipment) 86,400 Personnel department expenses 90,000 a. Prepare an income statement based on full absorption costing, Only use a negative sign with your answer for net income (loss), if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable. Absorption Costing Income Statement Sales Gost of Goods Sold @ Absorption Costing Income Statement Sales Cost of Goods Sold: Beginning Inventory Direct materials Direct labor s Less: Ending Inventory Cost of Goods Sold Net Income (Loss) b. Prepare an income statement based on variable costing. Only use a negative sign with your answer for net income (loss), if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable. Variable Costing Income Statement Sales Variable cost of Goods Sold: Beginning Inventory Direct materials Direct labor 1 5 Less Ending Inventory Less: Ending Inventory Variable cost of goods sold Fixed costs . Operating expenses Total Fixed Cost Net Income (Loss) C. Assume that you must decide quickly whether to accept a special one-time order for 1,000 units for $90 per unit. Which income statement presents the most relevant data? Determine the apparent profit or loss on the special order based solely on these data. Use a negative sign with your answer if the special order creates an apparent loss. Round answer to the nearest whole number. $ d. If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an insurance claim for the fire loss? Why? Select the most appropriate statement Absorption costing approach because the cost should include a reasonable portion of fixed manufacturing costs. Variable costing approach because the cost should include a reasonable portion of fixed manufacturing costs