Great Outdoze Company manufactures sleeping bags, which sell for $65.90 each. The variable costs of production are as follows: Direct material $ 19.20 Direct labor 10.40 Variable manufacturing overhead 6.40 Budgeted fixed overhead in 20x1 was $180,900 and budgeted production was 27,000 sleeping bags. The years actual production was 27,000 units, of which 23,500 were sold. Variable selling and administrative costs were $1.80 per unit sold; fixed selling and administrative costs were $21,000. Required:

1. Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing

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

2-b. Prepare an operating income statement for the year using variable costing.

3. Reconcile reported operating income under the two methods using the shortcut method.