Exercise 19-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials $ 35 per unit Direct labor $ 55 per unit Overhead costs Variable $ 20 per unit Fixed $ 8,000,000 (per year) Selling and administrative costs for the year Variable $ 700,000 Fixed $ 4,250,000 Production and sales for the year Units produced 100,000 units Units sold 70,000 units Sales price per unit $ 360 per unit

1. Prepare an income statement for the year using variable costing.

2. Prepare an income statement for the year using absorption costing.

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