Bressler Company sells its products for $33 each. The current production level is 50,000 units, although only 40,000 units are anticipated to be sold.

Unit manufacturing costs are:

Direct materials $6.00

Direct manufacturing labor $9.00

Variable manufacturing costs $4.50

Total fixed manufacturing costs $180,000

Marketing expenses $3.00 per unit, plus $60,000 per year

Required:

a. Prepare an income statement using absorption costing.

b. Prepare an income statement using variable costing.