2. ABC Company manufactures a single type of product and the following information is available :

Selling Price per unit $190

Information for Year 1:

Units in Beginning Inventory 0

Units Produced 25,000

Units sold 23,800

Information for Year 2:

Units in Beginning Inventory ?

Units Produced 20,000

Units sold 21,000

Fixed Cost per month (same for Year 1 and Year 2):

Fixed Selling & Admin $80,000

Fixed MOH $180,000

Variable cost per unit (same for Year 1 and Year 2):

DM $34

DL $21.75

Variable MOH $13.5

Variable Selling& Admin $10.5

Required:

a. Calculate the unit product cost for Year 1 under variable costing system. (3 marks)

b. Calculate the unit product cost for for Year 1 under absorption costing system. (3 marks)

c. Prepare the Income Statement only for Year 2, using the variable costing system. (8 marks)