ABC company produces a single product with the following information about the 3 years from 2016 to 2018:

Variable costs per unit:
	Direct materials	$ 4
	Direct labor	$ 6
	Variable mfg. overhead	$ 7
	Selling & administrative expenses	$ 3
Fixed costs per year:
	Manufacturing overhead	$250,000
	Selling & administrative expenses	$200,000

During 2016, ABC produced 50,000 units and sold 50,000 units. During 2017, It produced 60,000 units and sold 45,000 units. During 2018, it produced 50,000 units and sold 60,000 units. The selling price of the companys product is $50 per unit.

Instruction:

1. Prepare income statements of Coyote Company for 2016, 2017, 2018 using
   1. Variable costing.
   2. Absorption costing.
2. Compare the net incomes under variable costing with those under absorption costing for the 3 years. Explain the causes of differences in the net incomes for those 3 years between variable costing and absorption costing