Cool Company had the following operating data:

Variable Cost per Unit:

Direct Materials $3.01

Direct Labor 2.89

Variable Overhead 1.74

Fixed Cost per Year:

Overhead 186,000

Selling and Administrative 56,150

The data above covers the first two years of operations for this company. Cool Company produced 64,000 units in the first year and sold 61,300. In the second year, it produced 50,050 and sold 52,000 units. The selling price per unit each year was $21.94. The companyuses an actual costing system for product costing. Part 1 Prepare income statements for both years using absorption costing. Has firm performance, as measured by income, improved or declined from Year 1 to Year 2? Explain. Hint: you can create a column in the same income statement for each year. (5 points) Part 2 Prepare income statements for both years using variable costing. Has firm performance, as measured by income, improved or declined from Year 1 to Year 2? Explain. Hint: you can create a column in the same income statement for each year. (5 points) Part 3 Which method most accurately measures firm performance? Why? (2 points)