Find Income Statement Amounts: Vagabond Products uses the following unit costs for one of the products it manufactures:

This year, there were 1.000 units in beginning finished goods inventory: 5,500 units were produced; and 6.500 units were sold at $200 per unit. There was no beginning or ending work in process inventory. Actual costs were as estimated. Under- or overap- plied overhead is debited or credited to Cost of Goods Sold.

Required:

a. Prepare an income statement for the year, using variable costing.

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.

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Direct materials $78.00 Direct labor 49.40 Manufacturing overhead: Variable 15.60 Fixed (based on 5,000 units per year) 13.00 Marketing and administrative costs: Variable 10.40 Fixed (based on 5,000 units per year) 7.28