Duif Company’s absorption costing income statement for the last year of operations is presented

Duif Company’s absorption costing income statement for the last year of operations is presented below.

Sales…………………………………………………$70,000Less cost of goods sold:Beginning inventory………………………………………. 0Add cost of goods manufactured………………48,000Goods available for sale………………………….48,000Less ending inventory………………………………6,000Cost of goods sold………………………………..42,000Gross margin……………………………………….28,000Less selling and admin. expenses……………..25,000Net operating income…………………………..$ 3,000Data on units produced and sold for the year are given below.Units in beginning inventory……………………………..0Units produced……………………………………….8,000Units sold………………………………………………7,000Fixed factory overhead totaled $16,000 for the year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.

Required:

Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.