40) S Inc. manufactures and sells a single product. The following information relates to the last three operating years. = Year 2 Year 3 Year 1 $40 Selling price per unit $40 $40 Number of units sold 25,000 25,000 25,000 0 0 5,000 Beginning balance - finished goods inventory (in units) Ending balance - finished goods inventory (in units) 0 5,000 0 Fixed manufacturing overhead $120,000 $120,000 $120,000 Fixed advertising and administrative expenses $190,000 $190,000 $190,000 Product and period costs (per unit) Direct materials $10.50 $10.50 $10.50 Direct labor $9.50 $9.50 $9.50 Variable manufacturing overhead $4.00 $4.00 $4.00 $1.20 $1.20 $1.20 Variable advertising expenses (depends on the number of units sold) The Company adopts the marginal costing system to elaborate the monthly managerial reports. Also S Inc. adjusts those results to follow the assumptions of the absorption costing system for financial reporting purposes. Required: a) Prepare the income statements for the last three years considering the assumptions from the absorption costing system and the marginal costing system. b) Explain why the operating profit computations comparing the costing systems in (a) are similar or different