Stonegate Products uses the following unit costs for one of the products it manufactures:

This year, there were 1,500 units in beginning finished goods inventory; 5,000 units were produced; and 6,500 units were sold at $200 per unit. The beginning inventory was valued at $133 per unit using variable costing and at $147 per unit using fullabsorption costing. There was no beginning or ending work in process inventory.

a. Prepare an income statement for the year, using the contribution margin format.

b. Would reported operating profits be more, less, or the same if full-absorption costing was used? Support your conclusions with an income statement using full-absorption costing and the traditional format.

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Direct materials Direct labor Manufacturing overhead (based on 5,000 units): Variable Fixed .. Marketing and administrative costs (based on 6,500 units): . $82.00 $35.40 15.60 14.00 Variable Fixed .. 10.40 7.00