Absorption and variable costing with changing costs Data from the Flagston Company is below. Management uses both absorption and variable costing income statements.

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FLAGSTON COMPANY Schedule of Sales, Production, and Cost Data Year 1 2 3 4 Sales in units... 12,000 16,000 18,000 14,000 Production in units 17,000 18,000 12,000 13,000 Direct materials per unit $ 5 $ 6 $ 7 $ 7 Direct labor per unit 6 7 9 10 Variable MOH per unit 3 3 4 5 Fixed MOH.... $90,000 $105,000 $120,000 $120,000 Variable selling and administrative per unit 4 5 6 6 Fixed selling and administrative 50,000 60,000 80,000 90,000 Sales price per unit ....... $40 $45 $50 $52 Beginning inventory in units 0 5,000 7,000 1,000