Bosch Inc. manufacturing division produces small size speakers with the company's logo. Mr. Sound, the company's general manager, has asked you to prepare income statements for the Quiet Play model using both variable costing and absorption costing. You have been given the following data for the past year: Beginning Inventory 3,000 units Actual Production 23,000 units Ending Inventory 8,800 units Manufacturing Costs: Direct Material $8/unit Direct Labour $4/unit Variable Overhead $1.5/unit Fixed Overhead $99,000/year Non-manufacturing Costs: Variable Selling and Admin $3/unit Fixed Selling and Admin $24,300/year Fixed costs are allocated to production under absorption costing based on planned production of 22,000 units for the year. Planned production has been set at 22,000 for the past two years. Any over or under applied overhead is allocated directly to COGS. Each Quiet Play provides a contribution margin of $6.50.Required: Using the above information: 1) Calculate the unit product cost under both the variable costing method and the absorption costing method (2 marks). 2) Prepare two Income Statements; one using variable costing (5 marks) and the other using absorption costing (7 marks). 3) Reconcile the variable costing net income (or loss) with the absorption costing net income (or loss) (3 marks). 4) Help Mr. Sound understand the difference between variable and absorption costing by answering the following: a. What is the main difference between variable and absorption costing (1 mark) b. Under what circumstance would the income figures under variable and absorption costing be the same? (1 marks) c. Which method always has a higher product cost? (1 mark) d. Under absorption costing when are the fixed overhead costs expensed on the income statement? (1 mark)