Exercises 18-45 (Algo) Full vs. Variable Costing [LO 18-3, 18-4] Security Technology Incorporated (STI) is a manufacturer of an electronic control system used in the manufacture of certain special- duty auto transmissions used primarily for police and military applications. The part sells for $40 per unit and STI had sales of 24,550 units in the current year, 2021. STI had no inventory on hand at the beginning of 2021 and is projecting sales of 27,650 units in 2022. STI is planning the same production level for 2022 as in 2021, 26,100 units. The variable manufacturing costs for STI are $11, and the variable selling costs are only $0.90 per unit. The fixed manufacturing costs are $130,500 per year, and the fixed selling costs are $610 per year. Required 1 Required 2 Required 3 Prepare an income statement for each year using full costing. (Round your final answers to nearest whole dollar amount.) SECURITY TECHNOLOGY INCORPORATED Full Costing Income Statement 2021 $ 982,000 Variable Less: Cost of goods sold Beginning inventory $ 0 Cost of goods produced 417,600 Available for sale Less: Ending inventory Cost of goods sold Gross margin Less Selling and administrative costs Variable Fixed Operating income 417,600 24,800 2022 $ 1,106,000 $ 24,800 417,600 442,400 0 392,800 $ 589,200 442,400 $ 663,600 22,095 610 24,885 610 $ 22,705 566,495. 25,495 $ 638,105 Prepare an income statement for each year using variable costing. (Round your final answers to nearest whole dollar amount.) SECURITY TECHNOLOGY INCORPORATED Variable Costing Income Statement Sales Less: Cost of goods sold Beginning inventory Cost of goods produced Available for sale Less Ending inventory 2021 2022 $ 982,000 $ 1,106,000 $ 0 Cost of goods sold Add Variable selling and administrative 270,050 22,095 304,150 24,885 292,145 Contribution margin $ 689,855 Less Fixed manufacturing costs 130,500 130,500 Less Selling and administrative costs Fixed Operating income 610 $ 558,745 610 329,035 $ 776,965 $ 645,855 Required 1 Required 2 Required 3 Prepare a reconciliation of the difference each year in the operating income resulting from the full and variable costing methods. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your "Fixed overhead rate" answers to 2 decimal places, and other final answers to nearest whole dollar amount.) SECURITY TECHNOLOGY INCORPORATED Reconciling Difference in Operating Income Between Full and Variable Costing 2021 2022 Change in inventory in units (1,550) 1,550 Multiply times fixed overhead rate $ 5.00 $ 5.00 Difference in operating income $ (7,750) $ 7,750 < Required 2 Rabited &