variable versus full eostmg, income effeets Consider a single produet firm with the following LLAs, where q denotes units manufactured and selling and administrative is, of course, a period eost.

direet labor DL = lOq direct material DM = lOq overhead OV = 90,000 + 2DL; and selling and administrative SA = 120,000.
The product sells for 100 per unit. Initially no inventory is present. Production and sales quantities for five consecutive years are noted below. At no time is there any ending work-in-process inventory.
production sales prd.l prd.2 4,500 4,500 3,000 5,000 prd.3 4,500 4,500 prd.4 4,500 4,000 prd.5 4,500 6,000 Assume the various LLAs are eompletely aceurate. Determine the ineome and ending finished goods inventory for each period, using normal, full costing and using variable costing. Assume a normal volume of q = 4,500 units. How do you explain the period-by-period differences between full and variable eost ineome?AppendixLO1