Chairmaster began operations on January 1, 2018. During the first year of operations the company produced 25,000 units and sold 21,000 units. The second year had an increase in unit sales of 20% even though production dropped by 1,000 units. The company maintained the same unit selling price of $70 for both years. In 2018, direct material cost per unit and direct labour cost per unit were $10 and $15 respectively. Variable overhead costs were constant during both years at $5 per unit. The fixed manufacturing overhead cost in 2018 was $75,000. In 2019, the fixed manufacturing overhead cost increased by $6,600. Fixed selling and administrative cost were constant for both years at $56,000. The direct material cost per unit in 2019 was $12 and the direct labour cost in 2019 was $14. Variable selling and administrative expenses increased from $9 per unit in 2018 to $10 per unit in 2019. Following is the income statement for 2019 prepared by the assistant management accountant using the above information, and assuming use of FIFO: $1,764,000 ChairMaster INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2019 Sales Cost of goods sold: Opening inventory Cost of goods manufactured Cost of goods available for sale Ending inventory Cost of goods sold: Gross profit Selling and administrative Operating income $132,000 825,600 957,600 96,320 861,280 902,720 308,000 $594,720 REQUIRED: 1. Compute the unit manufacturing cost for both years using Absorption costing. 2. Assume the company uses variable costing with FIFO: (a) Compute the unit manufacturing cost for both years. (b) Prepare an income statement for the year ended December 31, 2019 in good form. 3. Reconcile the operating income as prepared by the assistant management accountant with that calculated in part 2 (b) above. 4. The assistant management accountant inquired why you prepared a variable costing income statement. 0) Briefly explain which format provides better information for internal users of the information, and why; (ii) Explain how / why the production manager could increase operating income by adjusting production volumes