Hammock Manufacturing manufactures a single product that it will sell for $ 76 per unit. The company is looking to project its operating income for its first two years of operations. Cost information for the single unit of its product is as follows:

During its first year of operations, the company plans to manufacture 26,000 units and anticipates selling 19, 000 of those units. During the second year of its operations, the company plans to manufacture 26, 000 units and anticipates selling 31 comma 000 units (it has units in beginning inventory for the second year from its first year of operations).

Requirement 2. Before you prepare the variable costing income statements for Hammock, predict the company's operating income using variable costing for both its first year and its second year without preparing the variable costing income statements. Hint: Calculate the variable costing operating income for a given year by taking that year's absorption costing operating income and adding or subtracting the difference in operating income as calculated using the following formula: Difference in operating income = (Change in inventory level in units x Fixed MOH per unit).

More Info Direct material per unit produced $36 Direct labor cost per unit produced $13 Variable manufacturing overhead (MOH) per unit produced $6 Variable operating expenses per unit sold $4 Fixed manufacturing overhead (MOH) for each year is $182,000, while fixed operating expenses for each year will be $83,000. Requirement 1. Prepare an absorption costing income statement for (a) the first year of operations and (b) the second year of operations. Hammock Manufacturing Income Statement (Absorption Costing) (a) Year 1 (b) Year 2 Less: Less: Requirement 1. Prepare an absorption costing income statement for (a) the first year of operations and (b) the second year of operations. Hammock Manufacturing Income Statement (Absorption Costing) (a) Year 1 (b) Year 2 ome statements for Hammock, predict the company's operating income using va ng the difference in operating income as calculated using the following formula: Contribution margin Cost of goods sold Fixed expenses Fixed manufacturing overhead Fixed operating expenses Gross profit Operating expenses Operating income Sales revenue Variable cost of goods sold Variable expenses Variable operating expenses 2 1 g the formula provided. T Difference in operating income TX1 Begin by calculating the difference in income each year using the formula provided. Change in inventory Fixed MOH Difference in Year level in units per unit operating income xxx 2 Now predict Hammock's operating income under variable costing for both its first year and its second year of operations. Operating income Year under variable costing 1 2 Requirement 3. Prepare a variable costing income statement for (a) the first year of operations and (b) the second year of operations. Hammock Manufacturing Contribution Margin Income Statement (Variable Costing) (a) Year 1 (b) Year 2 Contribution margin Cost of goods sold Fixed expenses Fixed manufacturing overhead Fixed operating expenses Gross profit Operating expenses Operating income Sales revenue Variable cost of goods sold Choc Variable expenses Variable operating expenses e input fields and then continue to the next