Hanks Company produces a single product. Operating data for the company and its absorption costing income

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

Units in beginning inventory..........................0

Units produced...........................................9,000

Units sold..................................................8,000

Sales.....................................................$80,000

Less cost of goods sold:

Beginning inventory....................................... 0

Add cost of goods manufactured.............54,000

Goods available for sale.........................54,000

Less ending inventory..............................6,000

Cost of goods sold.................................48,000

Gross margin........................................32,000

Less selling & admin. expenses..............28,000

Net operating income............................$ 4,000

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.