A company that makes cameras uses both variable and absorption costing. The following information pertains to the year just ended:

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A. Prepare an income statement using absorption costing.
B. Prepare an income statement using variable costing.
C. Assume that at the beginning of the year, the balance in the finished goods inventory was \(\$ 0\). What is the value of the finished goods inventory at the end of the year using absorption costing? What is the value using variable costing?
D. What causes the difference in net income between the two costing methods?

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Units produced Units sold Selling price per unit 1,000 750 $375 Variable product costs per unit $100 Variable selling expense per unit $20 Fixed manufacturing overhead for the year $70,000 Fixed administrative expense for the year $70,000