You have been given the following information concerning Orion Corporation, which manufactures the ever-popular cosmic gismo. Sales:

Question:

You have been given the following information concerning Orion Corporation, which manufactures the ever-popular cosmic gismo.
Sales: 10,000 units per year at a price of $51 p e r u n i t P r o d u c t i o n : 15, 000 u n i t s i n y e a r 1; 5, 000 u n i t s i n y e a r 2 B e g i n n i n g i n v e n t o r y : N o n e i n y e a r 1 V a r i a b l e (u n i t - l e v e l) c o s t :$ 5 per unit Facility-level production costs for the year: $225, 000, a l l f i x e d E n d i n g f i n i s h e d - g o o d s i n v e n t o r y i n y e a r 1 : O n e - t h i r d o f t h a t y e a r^{'} s p r o d u c t i o n A n n u a l f a c i l i t y - l e v e l s e l l i n g a n d a d m i n i s t r a t i v e c o s t s :$ 140,000, all fixed Required

a. Prepare absorption-costing income statements for year 1, year 2, and the two years taken together.

b. Prepare variable-costing income statements for year 1, year 2, and the two years taken together.

c. Write a short report to management that reconciles absorption-costing operating profit to variablecosting operating profit for year 1 and year 2.
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(a) and (b).

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