Xx E3-40A (similar to) Question Help The annual data that follow pertain to Sea Underwater, a manufacturer of swimming goggles. (Sea Underwater had no beginning inventories.) (Click the icon to view the data.) Requirements 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Sea Underwater for the year. 2. Which statement shows the higher operating income? Why? Reconcile the difference between the two statements. 3. See Underwater's marketing vice-president believes a new sales promotion that costs $185,000 would increase sales to 230,000 goggles. Should the company go ahead with the promotio Give your reason. Requirement 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Sea Underwater for the year. Begin with the conventional (absorption costing) income statement. (For entries with a zero balance, make sure to enter "0" in the appropriate cell.) Sea Underwater Conventional (Absorption Costing) Income Statement For the Year Ended December 31 Sales revenue $ 8,815,000 Less: Cost of goods sold: Beginning finished goods inventory $ Cost of goods manufactured 7,130,000 Cost of goods available for sale 7,130,000 Ending finished goods inventory (465,000) Cost of goods sold (6,665,000) Gross profit 2,150,000 Operating expenses (1,800,000) Sea Underwater Contribution Margin (Variable Costing) Income Statement For the Year Ended December 31 8815000 Variable expenses: Variable cost of goods sold: Beginning finished goods inventory 52440000 Variable cost of goods manufactured Variable cost of goods available for sale Ending finished goods inventory Variable cost of goods sold Operating expenses Contribution margin Fixed expenses: Sales commission expense $ 41 Sale price.. Variable manufacturing expense per unit 19 7 2,760,000 Sales commission expense per unit Fixed manufacturing overhead Fixed operating expenses Number of goggles produced Number of goggles sold 295,000 230,000 215,000