ReadiClean Company manufacturers a professional-grade vacuum cleaner and began operations in 2020. For 2020, ReadiClean budgeted to produce and sell 26,000 units. The company had no price, spending, or efficiency variances and writes off production-volume variance to cost of goods sold. Actual data for 2020 are given as follows: (Click the icon to view the actual data for 2020.) Read the requirements. Requirement 1. Prepare a 2020 income statement for ReadiClean Company using variable costing. Complete the top half of the income statement first, then complete the bottom portion input field.) Data table Variable Costing B 1 Units produced 23,000 2 Units sold 17,500 3 Selling price $ 422 4 Variable costs: 5 Manufacturing cost per unit produced: 6 Direct materials $ 35 7 26 Direct manufacturing labor Manufacturing overhead 8 54 9 Marketing cost per unit sold 49 10 Fixed costs: 11 $ 1,404,000 Manufacturing costs Administrative costs 12 1,004,500 13 Marketing costs 1,538,800 Requirement 2. Prepare a 2020 income statement for CleanAir Company using absorption costing. Complete the top half of the income statement first, then complete the bottom portion. (For amounts with a $0 balance, make sure to enter "O" in the appropriate input field. Label any variances as favorable (F) or unfavorable (U).) Absorption Costing Operating income (loss) Requirement 3. Explain the differences in operating incomes obtained in requirements 1 and 2. The 2020 operating income The difference in operating income under absorption costing and variable costing is than the operating income under variable costing under absorption costing is because As a result, under costing, a portion of the overhead remained in inventory and led to a cost of goods sold than under the other method. Requirement 4. CleanAir's management is considering implementing a bonus for the supervisors based on gross margin under absorption costing. What incentives will this bonus plan create for the supervisors? What modifications could CleanAir management make to improve such a plan? Explain briefly. What are some pros and cons of using an absorption-costing-based gross margin? What modifications could CleanAir management make to improve such a plan? Supervisors are less likely to pay attention to both variable and fixed costs under absorption-costing. Supervisors are more likely to pay attention to both variable and fixed costs under absorption-costing. Supervisors may be tempted to use fixed expenses to control contribution margin. Supervisors may be tempted to use inventory levels to control gross margin. Management could charge the supervisor a carrying cost for holding inventory. Management could eliminate any charges to the supervisor for holding inventory. Management could use nonfinancial performance measures such as the ratio of ending to beginning inve Supervisors are less likely to pay attention to be Supervisors are more ly to pay attention