Advanced Products, Inc., has just organized a new division to manufacture and sell specially designed tables using select hardwoods for personal computers.The division's monthly costs are shown in the schedule below:

Manufacturing costs:

Variable costs per unit:

Direct materials$86

Variable manufacturing overhead$4

Fixed manufacturing overhead costs$240,000

Selling and administrative costs:

Variable15% of sales

Fixed$160,000

Advanced Products regards all of its workers as full-time employees and the company has a long-standing no-layoff policy.Furthermore, production is highly automated.Accordingly, the company includes its labor costs in its fixed manufacturing overhead.The tables sell for $250 each.During the first month of operations, the following activity was recorded:

Units produced4,000

Units sold3,200

Required:

a)Determine the unit product cost under each of the following:

Variable costing.

Absorption costing.

b)Prepare income statement for the month using variable costing.

c)Prepare income statement for the month using absorption costing.