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Whitman Company has just completed its first year of operations. The company$$s absorption costing income statement for the year follows:

Whitman Company

Income StatementSales $(41,000$ units $$ $$41\mathrm{.}60$ per unit$)$$ $1,705,600$Cost of goods sold $(41,000$ units $$ $$20$ per unit$)820,000$Gross margin$885,600$Selling and administrative expenses$471,500$Net operating income$ $414,100$

The company$$s selling and administrative expenses consist of $$307,500$ per year in fixed expenses and $$4$ per unit sold in variable expenses. The $$20$ unit product cost given above is computed as follows:

Direct materials$ $10$Direct labor$3$Variable manufacturing overhead$3$Fixed manufacturing overhead $($$$196,00049,000$ units$)4$Absorption costing unit product cost$ $20$

Required:

Redo the company$$s income statement in the contribution format using variable costing.

Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows:

The company's selling and administrative expenses consist of $\backslash (\backslash$$ $307,500\backslash )$ per year in fixed expenses and $\backslash (\backslash$$ $4\backslash )$ per unit sold in variable expenses. The $\backslash (\backslash$$ $20\backslash )$ unit product cost given above is computed as follows:

Required:

$1.$ Redo the company's income statement in the contribution format using variable costing.

$2.$ Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.

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