The Vice President for Sales of Johnstown Company Has Received

The vice president for sales of Johnstown Company has received the following income statement for February, which was prepared using variable costing:
Sales $2,500,000
Variable production costs 1,200,000
Contribution margin 1,300,000
Fixed production costs 680,000
Fixed selling and administrative costs 400,000
Operating income $ 220,000
The controller attached the following notes to the statement:
1. The unit sales price for February was $25.
2. Fixed manufacturing costs are allocated to each unit at a predetermined rate based on normal monthly production of 85,000 units.
3. Production for November was 5,000 units in excess of sales.
4. The inventory on the last day of February consisted of 40,000 units.
5. Cost of goods sold is calculated using the FIFO cost flow assumption.
6. Materiality of the volume variance is calculated as a percentage of COGS.
The vice president for sales is not pleased with the results under variable costing and wonders what the operating income would have been with under absorption costing.
a)Present the February income statement under absorption costing. Create schedules showing the calculation of cost of goods sold and the volume variance.
b)Provide calculations for the difference between the variable costing and absorption costing operating income, and explain why the difference arises.
c)Which income statement provides a better measure of the company's operating performance during February? Justify your conclusion.