Provide income statements in both variable costing and absorption costing formats for an initial period and its successive period in a case where all manufactured products within the two periods are sold by the end of the second period, but number of units sold in the first period is less than the number of units manufactured in this period. What is the interesting observation in comparing the two types of income statements? Explain your example in detail and provide in-text citations.

Explain your work in detail and provide in-text citations. Include the initial situation and the initial assumptions in your answer.

Sample Solution