Great Outdoze Company manufactures sleeping bags, which sell for $66.60 each. The variable costs of production are as follows:

Direct material	$	18.30
Direct labor		11.00
Variable manufacturing overhead		7.40

Budgeted fixed overhead in 20x1 was $163,800 and budgeted production was 26,000 sleeping bags. The years actual production was 26,000 units, of which 24,000 were sold. Variable selling and administrative costs were $1.90 per unit sold; fixed selling and administrative costs were $29,000. 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