Baird Manufacturing pays its production managers a bonus based on the company's profitability. During the two most recent years, the company maintained the same cost structure to manufacture its products.

Year Units Produced Units Sold Production and Sales

2018 4,000 4,000

2019 6,000 4,000

Cost Data

Direct materials $ 13.4 per unit

Direct labor $ 22.4 per unit

Manufacturing overheadvariable $ 11.2 per unit

Manufacturing overheadfixed $ 103,800

Variable selling and administrative expenses $ 8.0 per unit sold

Fixed selling and administrative expenses $ 56,000

(Assume that selling and administrative expenses are associated with goods sold.)

Levine sells its products for $108.0 per unit.

Required

1. Prepare income statements based on absorption costing for 2018 and 2019. (Prepare income statements based on absorption costing for 2018 and separate for 2019. (Do not round intermediate calculations.)
2. Since Levine sold the same number of units in 2018 and 2019, why did net income increase in 2019? (did it: Decrease in fixed manufacturing cost, decrease in selling and administrative fixed cost, or increase in selling price?
3. Determine the costs of ending inventory for 2019.
4. Prepare income statements based on variable costing for 2018 and 2019.