Topple Company produces a single product. Operating data for the company and its absorption

Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below: 

 

Units in beginning inventory   2,000

Units produced   9,000

Units sold    10,000

Sales     $100,000

Less cost of goods sold:

Beginning inventory    12,000

Add cost of goods manufactured   54,000

Goods available for sale   66,000

Less ending inventory   6,000

Cost of goods sold    60,000

Gross margin     40,000

Less selling and admin. expenses   28,000

Net operating income$   12,000

 

Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 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.