Duif Company's absorption costing income statements for the last two years are presented below: Sales... Cost of goods sold: Beginning inventory.. Cost of goods manufactured.. Goods available for sale.. Ending inventory.. Cost of goods sold.. Gross margin.. Selling & admin. Expenses.. Net income.. Year 1 $70,000

- 0 - 48 000 48,000 6 000 42 000 28,000 25 000 $3,000

Year 2 $90,000

6,000 48 000 54,000 - 0 - 54 000 36,000 31 000 $5,000 Data on units produced and units sold in each of these years are Given below: Units in beginning inventory.. Units produced.. Units sold.. Year 1 -0- 8,000 7,000 Year 2 1,000 8,000 9,000 Fixed factory overhead totaled $16,000 in each year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.

Required:

a. Compute the unit product cost in each year under variable costing.

b. Prepare new income statements for each year using variable costing.

c. Reconcile the absorption costing and variable costing net income for each year.