ABC White Water Rafting Company manufactures kayaks, which sell for $565 each. The variable costs of production (per unit) are as follows:

Direct Material $200

Direct Labor 110

Variable manufacturing overhead 80Budgeted fixed overhead in 20x1 was $400,000 and the budgeted production was 50,000 kayaks. The year's actual production was 50,000 units, of which 47,000 were sold.Variable selling and administrative costs were $5 per unit sold; fixed selling and administrative costs were $75,000.

Required:

1. Calculate the product cost per kayak under (a) absorption costing and (b) variable costing.

2. Prepare operating income statements for the year using (a) absorption costing and(b) variable costing.