Variable and Absorption Costing Summarized data for 2019 (the first year of operations) for Gorman Products, Inc., are as follows: Sales (70,000 units) Production costs (80,000 units) Direct material Direct labor Manufacturing overhead: Variable Fixed Operating expenses Variable $2,800,000 880,000 720,000 544,000 320,000 175,000 Fixed 240,000 Depreciation on equipment 60,000 Real estate taxes 18,000 Personal property taxes (inventory & equipment) 28,800 Personnel department expenses 30,000 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 $ 2,800,000 Cost of Goods Sold: Beginning Inventory $ 2,156,000 x Direct materials 644,000 x Direct labor 415,000 x Manufacturing overhead = 0x Less: Ending Inventory 0x Absorption Costing Income Statement Sales $ 2,800,000 Cost of Goods Sold Beginning Inventory Direct materials $ 2,156,000 x 644,000 x Direct labor 415,000 x Manufacturing overhead = 0 x Less: Ending Inventory 0 x Cost of Goods Sold 0 x Gross profit = 0x Operating expenses 0 x Net Income (Loss) $ 0x 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 100,000 x $ 0x Direct labor Less: Ending Inventory Variable cost of goods sold 0 x Variable manufacturing overhead 0x 0 x 0 x Variable operating expenses 0 Contribution margin 0 Fixed costs Manufacturing overhead 0 0x Operating expenses 0x Total Fixed Cost Net Income (Loss) 0 0 x 0 x G pare 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 o answers. Round answers to the nearest whole number, when applicable. Variable Costing Income Statement Sales $ 100,000 x Variable cost of Goods Sold: Beginning Inventory Direct materials Direct labor Variable manufacturing overhead Less: Ending Inventory Variable cost of goods sold $ 0 x 0 x 0x 0x 0 x 0 x 0 x Variable operating expenses Contribution margin = = Fixed costs Manufacturing overhead : 0 x Operating expenses 0x Total Fixed Cost Net Income (Loss) 0 x $ 0 x c. Assume that you must decide quickly whether to accept a special one-time order for 1,000 units for $25 per unit. Which income statement presents the most relevant data? variable costing 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. $ 1,576 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? Wh Select the most appropriate statement. Absorption costing approach because the cost should include a reasonable portion of fixed manufacturing costs. Ovariable costing approach because the cost should include a reasonable portion of fixed manufacturingu