Variable and Full Costing Income: Comprehensive Problem The following information relates to Porter Manufacturing 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 incorne computed under variable and full costing.

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Selling price per unit Direct material per unit Direct labor per unit Variable manufacturing overhead per unit Variable selling cost per dollar of sales Annual fixed manufacturing overhead Annual fixed selling expense 120 60 $ 20 $ 5 $ 0.10 $2,000,000 $1,000,000 Annual fixed administrative expense Units produced Units sold $ 800,000 200,000 170,000