During the first year of operations , Greenwood Village Fridge Company manufactured 40,000 mini refrigerators, of which

During the first year of operations , Greenwood Village Fridge Company manufactured 40,000 mini refrigerators, of which 36,000 were sold. Operating data for the year are summarized as follows:

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                        $6,480,000

Manufacturing cost:

  Cost of goods manufactured including:

          Direct materials. . . . . . . ……………………….                         3,200,000

          Direct labor . . . . . ……… ………………………..                     1,120,000

          Variable manufacturing overhead. . . . . . .                     880,000

          Fixed manufacturing overhead . . . . ………                  560,000                                      

          Variable Selling and administrative expenses . . . . . . .              648,000

          Fixed Selling and administrative expenses …………………288,000

Required

Prepare the company’s income statement under absorption costing.

Prepare the company’s income statement under variable costing.

Explain any difference between the company’s income under costing from parts a and b above.