Variable and Absorption Costing The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the year ended December 31: Line Item Description (in millions) Sales $26,600 Cost of goods sold $(22,610) Selling, administrative, and other expenses (2,390) Total expenses $(25,000) Operating income $1,600 Assume that $5,850 million of cost of goods sold and $1,330 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows: Line Item Description Amount Beginning inventory $3,190 Ending inventory 3,720 Also, assume that 30% of the beginning and ending inventories were fixed costs. Question Content Area a. Prepare an income statement according to the variable costing concept for Caterpillar Inc. Round numbers to nearest million. Caterpillar Inc. Variable Costing Income Statement (assumed) For the Year Ended December 31 (In millions) Line Item Description Amount Amount Sales $Sales 26,600 Variable cost of goods sold: Beginning inventory $Beginning inventory Variable cost of goods manufactured Variable cost of goods manufactured Ending inventory Ending inventory Total variable cost of goods sold Total variable cost of goods sold Variable selling and administrative expenses $Variable selling and administrative expenses Contribution margin Contribution margin Fixed selling and administrative expenses $Fixed selling and administrative expenses Fixed costs: Fixed manufacturing costs $Fixed manufacturing costs Fixed selling and administrative expenses Fixed selling and administrative expenses Total fixed costs Total fixed costs Operating income