A company started on 1 January 2021. Production, sales, and inventory data for the fist two years of its operation are given below:

Units	2021	2022
Opening inventory	-	3,000
Units Produced	18,000	18,000
Units Sold	15,000	15,000

The cost to manufacture one unit of products as follows:

Direct Materials: $3 / Direct Labour $2 / Variable manufacturing overhead $1 / Fixed manufacturing overhead $4 = $10

Fixed manufacturing overhead totals $72,000 per year. Variable and selling administrative expense total $2 per unit sold.

(Per unit or selling price $16)

Answer:

a) Prepare an income statement using variable costing for each year

b) Reconcile the absorption costing and variable costing net income or loss figured for each year.