The following data relate to Socks Company for the year ended December 31, 1998: poi7

There were no beginning inventories. Assume direct materials and direct labor are variable costs. Prepare two income statements — a variable costing income statement and an ab- sorption costing income statement.

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Cost of production: Manufacturing overhead: Variable Direct materials (variable) Direct labor (variable) $360,000 504,000 180,000 360,000 108,000 72,000 144,000 150,000 Fixed Sales commissions (variable) Sales salaries (fixed) Administrative expenses (fixed) Units produced Units sold (at $18 each) Beginning inventory, January 1, 1998 120,000 -0-