The following information relates to Dorian Industrial for fiscal 2008, the company's first year of operation:

Required

a. Prepare an income statement using full costing.

b. Prepare an income statement using variable costing.

c. Calculate the amount of fixed manufacturing overhead that will be included in ending inventory under full costing and reconcile it to the difference between income computed under variable and full costing.

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Units produced Units sold Direct material per unit Selling price per unit Direct labor per unit Variable manufacturing overhead per unit. Variable selling cost per unit Annual fixed manufacturing overhead Annual fixed selling expense Annual fixed administrative expense 400,000 375,000 $ 48 $ 12 $ 4 $ 3 $ 0.15 $1,000,000 S 275,000 $ 125,000