Exercise $4-9($Algo$)$ Variable and Absorption Costing Unit Product Costs and Income Statements

$[$LO$4-1,$ LO$4-2,$ LO$4-3]$

Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two

years of operations:

During its first year of operations, Walsh produced $50,000$ units and sold $40,000$ units. During its second year of operations,

it produced $40,000$ units and sold $50,000$ units. The selling price of the company's product is $$51$ per unit.

Required:

Assume the company uses variable costing:

a$.$ Compute the unit product cost for Year $1$ and Year $2.$

b$.$ Prepare an income statement for Year $1$ and Year $2.$

Assume the company uses absorption costing:

a$.$ Compute the unit product cost for Year $1$ and Year $2.$

b$.$ Prepare an income statement for Year $1$ and Year $2.$

Reconcile the difference between variable costing and absorption costing net operating income in Year $1$ and Year $2.$