Frances Manufacturing makes only one product with total unit manufacturing costs of $70, of which $42 is variable. No units were on hand at the beginning of 2015. During 2015 and 2016, the only product manufactured was sold for $107 per unit, and the cost structure did not change. Frances uses the first-in, first-out inventory method and has the following production and sales for 2015 and 2016.

Units Manufactured

2015 = 100,000

2016 = 100,000

Units Sold

2015 = 70,000

2016 = 120,000

a. Prepare gross profit computations for 2015 and 2016 using absorption costing.

Do not use negative signs with your answers.

b. Prepare gross profit computations for 2015 and 2016 using variable costing.

Do not use negative signs with your answers.