5C-3

2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first): a. Compute the unit product cost for Year 1, Year 2, and Year 3. Unit Product Year 1 Year 2 Year 3 b. Prepare an income statement for Year 1, Year 2, and Year 3. O'Brien Company Variable Costing Income Statement Year 1 Year 2 Year 3 Variable expenses: Total variable expenses Fixed expenses: Total fixed expenses