Dorant Ltd$.$ manufactures components for commercial lighting. The

manufacturing process is robotically automated. Dorant commenced

operations in $2021.$ Traditional income statements follow:

Information used in preparing the income statements includes:

$-$Variable manufacturing costs $($direct labour, direct materials, and variable

manufacturing overhead$)$ total $$3$ per unit, and fixed manufacturing

overhead costs total $$400,000$ per year.

$-$Fixed manufacturing costs are applied to units of product on the basis of

the number of units produced each year $($i$.$e$.,$ a new fixed overhead rate is

computed each year$).$

$-$The company uses a FIFO inventory flow assumption.

$-$Variable selling and administrative expenses are $$2$ per unit sold. Fixed

selling and administrative expenses total $$100,000$ per year.

$-$Production and sales information for the three years is as follows:

Required:

a$)$ Compute operating income for each year under the variable costing

approach.

b$)$ Prepare a reconciliation from your Operating Income $($loss$)$ under

variable costing to Absorption Costing operating income for $2023.$

c$)$ Referring to the absorption costing income statements above, explain

why operating income was higher in $2022$ than in Year $2021$ under

absorption costing, in light of the fact that fewer units were sold in $2022$

than in $2021.$

d$)$ Referring again to the absorption costing income statements, explain

why the company suffered an operating loss in $2023$ but reported a

positive operating income in $2021,$ although the same number of units

were sold in each year.

e$)$ If the company had used just$-$in$-$time $($JIT$)$ during $2022$ and $2023$ and

produced only what could be sold, what would have been the company's

operating income $($loss$)$ for each year under absorption costing.