The vice-president for sales of Huber Corporation has received the following income statement for November, which was prepared on a variable-costing system. The firm has just adopted variable costing for its internal reporting.

The controller attached the following notes to the statements:
1. The unit sales price for November averaged $24.
2. The unit manufacturing costs for the month were as follows:
Variable costs.....................................$12
Fixed costs applied.................................4
Total cost..........................................$16
3. The unit rate for fixed manufacturing costs is a predetermined rate based on a monthly production of 150,000 units.
4. The variable costs per unit have been stable all year.
5. Production for November was 45,000 units in excess of sales.
6. The inventory at November 30 was 80,000 units.
Instructions
(a) The vice-president for sales is not comfortable with the variable- costing system and wonders what the net income would have been under the previous absorption-costing system.
1. Present the November income statement on an absorption-costing basis.
2. Reconcile and explain the difference between the variable- costing and absorption-costing net income figures.
(b) Explain the features of variable-cost income measurement that should be attractive to the vice-president for sales.

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HUBER CORPORATION Income Statement For the Month of November in thousands) Sales Less variable cost of goods sold Contribution margin Less fixed manufacturing costs at budget Gross margin Less fixed selling and administrative costs Net income before taxes $2,400 1,200 1,200 600 600 400 $ 200