31. Absorption Costing Versus Variable Costing. Technic Company produces portable CD players. The company has no finished goods inventory at the beginning of year 1. The following information pertains to Technic Company. Annual production 50,000 units Sales price $40 per unit Variable production cost per unit Direct materials $107 Direct labor 3 $25 per unit Manufacturing overhead 12 Fixed production costs $150,000 each year; $3 per unit at 50,000 units of production Variable selling and administrative cost $1 per unit Fixed selling and administrative cost $100,000 each year Required: 1. All 50,000 units produced during year 1 are sold during year 1. 1. Prepare a traditional income statement assuming the company uses absorption costing. 2. Prepare a contribution margin income statement assuming the company uses variable costing. 2. Although 50,000 units are produced during year 2, only 40,000 are sold during the year. The remaining 10,000 units are in finished goods inventory at the end of year 2.1. Prepare a traditional income statement assuming the company uses absorption costing. 2. Prepare a contribution margin income statement assuming the company.r uses variable costing