3.WalkLikeYou, Inc. is a manufacturer that reports the following information from the current period for its product.

Sales price per unit

$120.00

per unit

Manufacturing costs incurred this period:

DM

$31.75

per unit

DL

$17.20

per unit

Variable OH

$5.50

per unit

Fixed OH

$131,500

Per period

Non-Manufacturing (i.e. Selling and Administrative) costs incurred this period:

Variable S&A

$6.75

per unit

Fixed S&A

$209,790

Per period

Units in finished goods inventory, beginning of the month

0

Units

Units produced this month

10,000

Units

Units sold this month

10,000

Units

PARTA:

1)Calculate net income for the period company using absorption costing.

2)Calculate net income for the period company using variable costing.

PARTB:Suppose the firm decides to increase its production to 50,000 units (assume the firm has enough excess capacity to produce the 50,000 units) but continues to sell only 10,000 units.

1)Calculate net income for the period company using absorption costing at this new 50,000 unit level of production.

2)Compare your answer in PARTB, 1) to your answer in PARTA, 1).By how much did net income change under absorption costing?

3)Calculate net income for the period company using variable costing at this new 50,000 unit level of production.

4)Compare your answer in PARTB, 3) to your answer in PARTA, 2).By how much did net income change under variable costing?