All questions must be answered in this Excel file and referencing.

B D E F H 1 Operating data for Siesta Company and its absorption costing income statements for 2 the last two years are presented below: Required: a) What was the unit product cost in each year under variable costing 3 4 5 Year 1 Year 2 Year 1 Year 2 6 7 8 Units in beginning inventory Units produced Units sold 2,000 14,000 15,000 1,000 14,000 12,000 9 10 $ 240,000 $ 320,000 Add: Cost of Goods Manufactured Beginning inventory Direct labour Direct materials Everyone loves managerial accounting Fixed manufacturing overhead Fixed selling and administrative Good luck! b) Prepare new income statements for each year using variable costing Siesta Company Variable Costing Income Statement 11 12 13 Sales Cost of Goods Sold Beginning inventory Add: Cost of Goods Manufactured Goods available for sale Less: Ending inventory Cost of Goods Sold Gross margin Selling and administrative expenses Operating income 10,569 147,960 158,529 31,706 14 15 Year 1 Year 2 21,137 147,960 169,097 10,569 158,529 81,471 89,000 (7,529) $ 16 Sales Less: Variable expenses 126,823 193,177 81,200 111,977 $ 17 18 19 20 21 22 23 24 Fixed manufacturing overhead Direct material per unit Direct labour per unit Variable Manufacturing overhead per unit Variable Selling & Admin costs per unit $ $ $ $ $ $ $ $ 56,400 $ 2.00 $ 3.00 $ 1.54 $ 2.60 $ 56,400 2.00 3.00 1.54 Contribution margin 2.60 25 26 27 28 29 Operating income (loss) 20 A B D E F G H C (7,529) $ 19 Operating income $ 111,977 20 21 22 Fixed manufacturing overhead Direct material per unit Direct labour per unit Variable Manufacturing overhead per unit Variable Selling & Admin costs per unit 23 24 25 26 $ $ $ $ $ $ $ 56,400 $ 2.00 $ 3.00 $ 1.54 $ 2.60 $ 56,400 2.00 3.00 1.54 Contribution margin 2.60 27 28 29 Operating income (loss) 30 31 c) Reconcile the difference in Operating Income between variable costing and absorption costing 32 Variable costing operating income 33 34 35 36 37 38 39 Absorption costing operating income 40