EagleEye Ltd. produces and sells a single product, a wooden hand loom for weaving small items such as scarves. Selected cost and operating data relating to the product for two years are given below: Selling price per unit. 67 Manufacturing costs: Variable per unit produced: Direct materials ... Direct labor ...... Variable manufacturing overhead .... Fixed manufacturing overhead per year $12 S6 3 $120.000 4 70000 Selling and administrative expenses: Variable per unit sold .... Fixed per year .. Year 01 Units in beginning inventory .. 0 Units produced during the year 12000 Units sold during the year. 8000 Units in ending inventory. 4000 Required: 1. Assume the company uses absorption costing. a. Compute the unit product cost in each year. b. Prepare an income statement for each year. Year 02 4000 6000 8000 2000 . . . 2. Assume the company uses variable costing. a. Compute the unit product cost in each year. b. Prepare an income statement for each year. 3. Reconcile the variable costing and absorption costing net operating incomes. Explain why operating income differ when prepared under variable and absorption costing systems