Below is operating information for Weber Light Aircraft, a company that produces light recreational aircraft.

	By Aircraft	Per month
Sale price	$ 900,000
Direct materials	$250,000
Direct labour	$175,000
Variable manufacturing overhead	$15,000
Fixed manufacturing costs		$200,000
Variable selling and administrative expenses	$50,000
Fixed selling and administrative expenses		$70,000

	January	February	March
Initial inventory	0	0	2
Units produced	2	4	3
units sold	2	2	5
running out of inventory	0	2	0

1. Suppose the company uses variable costs

a. Calculate the unit cost of the product.

b. Prepare an income statement for January, February and March.

2. Suppose the company uses absorption costs:

a. Calculate the unit cost of the product.

b. Prepare an income statement for January, February and March.