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In: AccountingVariable Costing, Absorption CostingDuring its first year of operations, Snobegon, Inc. (located inLake Snobegon,...Variable Costing, Absorption CostingDuring its first year of operations, Snobegon, Inc. (located inLake Snobegon, Minnesota), produced 40,000 plastic snow scoops.Snow scoops are oversized shovel-type scoops that are used to pushsnow away. Unit sales were 38,100 scoops. Fixed overhead wasapplied at $0.75 per unit produced. Fixed overhead was underappliedby $2,500. This fixed overhead variance was closed to Cost of GoodsSold. There was no variable overhead variance. The results of theyear’s operations are as follows (on an absorption-costingbasis):Sales (38,100 units @ $20)$762,000Less: Cost of goods sold548,760     Gross margin$213,240Less: Selling and administrative expenses (all fixed)185,500     Operating income$ 27,740Required:1. Calculate the cost of the firm’s endinginventory under absorption costing. Round unit cost to five decimalplaces. Round your final answer to the nearest dollar.What is the cost of the ending inventory under variable costing?Round unit cost to five decimal places. Round your final answer tothe nearest dollar.2. Prepare a variable-costing income statement.Round the unit cost to five decimal places, when required. Roundyour final answers to the nearest dollar. Use the rounded values insubsequent computations.What is the difference between the two income figures?