2) Prepare a reconciliation of the difference between absorption-costing and variable-costing income in the two years, like the spreadsheet excerpt at the top of p. 336 in the textbook (formula 2).

Only reason for difference in net income between variable costing and absorption costingis the amount of fixed manufacturing overheads deferred to next year when actual units produced are more than the actual units sold (as in case of year-1) due to fixed manufacturing overheads lying in ending inventory units.

For Year-1: Fixed mfg.cost lying in ending inventory ($48,000/ 3,600 units) x 400 units = $5,333.

For Year-2: Fixed mfg.cost lying in beginning inventory = Fixed mfg.cost lying in Year-1's ending inventory

For Year-2: Fixed mfg.cost lying in ending inventory = ($48,000/3,200 units) x 100 units = $1,500.

= $5,333.

Please see the attached file for the complete solution