Discon Corporation manufactures a popular doll called Teardrops. Last year the company started with 10,100 dolls, produced 210,000 dolls, and ended the year with 8,100 dolls. Each doll was sold for $22. The actual unit cost for Teardrops is given below:

Direct material	$	2.10
Direct labour		0.40
variable overhead		2.60
Fixed overhead		6.90
Total unit cost	$	12.00

The only selling expenses were a commission of $3 per unit sold and advertising amounting to $351,000. Administrative expenses, all fixed, equaled $271,000. There were no beginning and ending work-in-process inventories.

Required

1. Prepare an income statement.

2. Calculate the following per unit costs.

a. Prime Cost

b. Conversion Cost

c. Variable cost