Variable and Absorption Costing Summarized data for 2019 (the first year of operations) for Gorman Products, Inc., are as follows: Sales (70,000 units) $2,800,000 Production costs (80,000 units) Direct material 880,000 Direct labor 720,000 Manufacturing overhead: Variable 544,000 Fixed 320,000 Operating expenses: Variable 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 $ OV Direct materials 880,000 Direct labor 720,000 Manufacturing overhead 864,000 Less: Ending Inventory 308,000 Cost of Goods Sold 2,156,000 Gross profit 544,000 Operating expenses 21,440,004.5 x Net Income (Loss) $ 92,200 xb. 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 $ 2,800,000 Variable cost of Goods Sold: Beginning Inventory $ Direct materials 880,000 Direct labor 720,000 Variable manufacturing overhead + V 544,000 Less: Ending Inventory 268,000 Variable cost of goods sold 1,876,000 Variable operating expenses 175,000 Contribution margin 749,000 Fixed costs: Manufacturing overhead 320,000 Operating expenses 376,800 * Total Fixed Cost 696,800 x Net Income (Loss) $ 52,200 x