The following data were adapted from a recent income statement of Procter & Gamble Company:

(in millions)

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . $83,062

Operating costs:

Cost of products sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $42,460

Marketing, administrative, and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . 25,314

Total operating costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $67,774

Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$15,288

Assume that the variable amount of each category of operating costs is as follows:

(in millions)

Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23,778

Marketing, administrative, and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,125

A. Based on the data given, prepare a variable costing income statement for Procter & Gamble Company, assuming that the company maintained constant inventory levels during the period.

B. If Procter & Gamble reduced its inventories during the period, what impact would that have on the income from operations determined under absorption costing?