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 2,814 tonnes. In 2021, the production and sales results were exactly reversed. In each year, the selling price per tonne was $1,900; variable manufacturing costs were 15% 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 $2,814,000; and fixed administrative expenses were $537,600.

Prepare comparative income statements for each year using variable costing.

For the Years Ended December 31 2020 2021 Number of units manufactured 4,200 2,814 Number of units sold 2,814 4,200 Sales 5,346,600 7,980,000 TLess T Variable costs Inventory, beginning 299,250 Add . Costs of goods manufactured 1,197,000 897,750 Cost of goods available for sale 1,197,000 1,197,000 HOTELIETU 0 Less Inventory, ending 299,250 TVariable cost of goods sold 897,750 1,197,000 Variable selling and administrative costs 588,126 877,800 Total variable costs 1,485,876 ,074,800 Contribution margin 3,860,724 5,905,200 Tless . Fixed costs 3,351,600 3,351,600 Net income 509,124 2,553,600