AFN Company produces plastic that is used for injection-moulding applications such as gears for small motors. In 2020, the first year of operations, AFN Company produced 4,200 tonnes of plastic and sold 2,772 tonnes. In 2021, the production and sales results were exactly reversed. In each year, the selling price per tonne was $2,200; variable manufacturing costs were 14% of the sales price for the units produced; variable selling expenses were 11% of the selling price of the units sold; fixed manufacturing costs were $2,772,000; and fixed administrative expenses were $525,000.

Prepare comparative income statements for each year using absorption costing. (Use the format from Illustration 8.4.) AFN COMPANY Income Statement-Absorption Costing For the Years Ended December 31 - 2020 2021 Number of units produced 4200 2772 Number of units sold 2772 4200 Sales $ 6098400 9240000 Less : Cost of goods sold Inventory, beginning Add Costs of goods manufactured Cost of goods available for sale Less : Inventory, ending Cost of goods sold Gross margin- Less : Selling and administrative expenses Net income LINK TO TEXT LINK TO TEXT LINK TO TEXT