During Durton Companys first two years of operations, the company reported variable costing operating income as shown below. Production and cost data for the two years are given:

	Year 1	Year 2
Units produced	25,000	25,000
Units sold	20,000	30,000

		Year 1			Year 2
Sales (at $50 per unit)	$	1,000,000		$	1,500,000
Variable expenses:
Variable cost of goods sold (at $20 per unit)		400,000			600,000
Variable selling and administrative costs (at $3 per unit)		60,000			90,000
Total variable expenses		460,000			690,000
Contribution margin		540,000			810,000
Fixed expenses:
Fixed manufacturing overhead		350,000			350,000
Fixed selling and administrative		250,000			250,000
Total fixed expenses		600,000			600,000
Operating income (loss)	$	(60,000	)	$	210,000

The companys $20 unit product cost is computed as follows:

Direct materials	$	8
Direct labour		10
Variable manufacturing overhead		2
Unit product cost	$	20

Required:

1. Prepare an absorption costing income statement for each year.

2. Reconcile the absorption costing and variable costing operating income figures for each year. (Loss amounts should be indicated by a minus sign.)