Great Outdoze, Inc., manufactures high-quality sleeping bags, which sell for $65.70 each. The variable costs of production are as follows:

Direct material	$	18.10
Direct labor		9.40
Variable manufacturing overhead		7.50

Budgeted fixed overhead in 20x4 was $151,800 and budgeted production was 23,000 sleeping bags. The years actual production was 23,000 units, of which 19,100 were sold. Variable selling and administrative costs were $1.80 per unit sold; fixed selling and administrative costs were $25,000.

Required:

1.	Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing. (Do not round intermediate calculations and round your final answers to 2 decimal places.)

2.	Prepare operating income statements for the year using:

a.	Absorption costing. (Do not round intermediate calculations.)

b.	Variable costing. (Do not round intermediate calculations.)

3.	Reconcile reported operating income under the two methods using the shortcut method. What will be the difference in reported income? (Round your predetermined fixed overhead rate to 2 decimal places.)