Below is an exerpt from the financial data from JasNav Inc. The company has adopted a standard costing system. The following data are for the year ended December 31, 20x3:

Inventory, Jan 1, 20x3	100,000 units
Inventory, Dec 31, 20x3	35,000 units
Sales	350,000 units
Selling price	$35.00
Variable manufacturing costs	7.00
Variable selling costs	1.50
Fixed manufacturing overhead	$1,710,000
Denominator-level direct labour hours	7,500
Standard production rate	40 units per direct labour hour
Fixed operating expenses	$1,000,000

Required

Prepare income statements under variable and absorption costing for the year ended December 31, 20x3 and reconcile the two incomes. Assume that the budget costs were the same as the actual costs incurred.