Hawthorne Golf, the maker of a sought-after set of golf clubs, was formed in 2012. The selling price for each golf club set is $1,700, variable production costs are $900 per unit, fixed production costs are $2,024,200 per year, and fixed selling and administrative costs are $2,315,400 per year. Data below indicate net income for 20122014 under full costing. In 2012 and 2013, Milo Hawthorne, Jr., was the president of Hawthorne Golf. The board of directors was generally pleased with the companys performance under his leadershipthe company hit the break-even point in its first year of operation and had a modest profit in 2013. Milo quit at the end of 2013 and went on to buy a golf course and open a pro shop. His replacement, Daryl Selmer, was apparently not as successful as Milo. Daryl argued that he was improving the company by getting rid of excess inventory, but the board noted that the company showed a $111,900 loss in the first year of his leadership.

		2012		2013		2014
Production (units)		6,980		6,980		2,792
Sales (units)		4,540		5,510		6,702
Production cost per unit		$1,190		$1,190		$1,625
Sales		$7,718,000		$9,367,000		$11,393,400
Less cost of goods sold		5,402,600		6,556,900		9,189,900
Gross margin		2,315,400		2,810,100		2,203,500
Less selling and administrative expense		2,315,400		2,315,400		2,315,400
Net income (loss)		$0		$494,700		($111,900	)
**Recalculate net income for all three years using variable costing. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Variable costing	2012	2013	2014
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either ( less or add):
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