(Income statements for 2 years, both methods) Modernage manufactures portable tele¬ phones. The following data from the company are available for 1997 and 1998:

In addition, selling and administrative fixed costs were $190,000. All vari¬ ances are charged or credited to Cost of Goods Sold.
Prepare income statements under absorption and variable costing for the years ended 1997 and 1998. Reconcile the differences in income between the methods. (Ignore taxes.)LO1

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Selling price per unit Number of units sold Number of units produced Beginning inventory (units) Ending inventory (units) 1997 1998 $ 170 $ 170 20,000 24,000 25,000 22,000 15,000 20,000 20,000 P Standard costs per unit for 1997 and 1998 were Direct material Direct labor $20.00 60.00 Variable overhead Fixed overhead Variable sales commission 20.00 20.00 30.00 (based on budget of $750,000 and normal capacity of 25,000 units)