Herring Manufacturing manufactures a single product that it will sell for $90 per unit. The company is looking to project its During its first year of operations, the company plans to manufacture 25,000 units and anticipates selling 19,000 of those operating income for its first two years of operations. Cost information for the single unit of its product is as follows: units. During the second year of its operations, the company plans to manufacture 25,000 units and anticipates selling 30,000 units (it has units in beginning inventory for the second year from its first year of operations). (Cilick the icon to view the data.) Read the reguirements Requirement 1. Prepare an absorption costing income statement for (a) the first year of operations and (b) the second year of operations Herring Manufacturing Income Statement (Absorption Costing) (a) Year 1 (b) Year 2 Sales revenue Less: Cost of goods Gross profit Less: Operating expenses 17100002700000 income Requirement 2. Before you prepare the variable costing income statements for Herring, 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 years 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 uni. 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 Requirement 3. Prepare a variable costing income statement for (a) the first year of operations and (b) the second year of operations. Herring Manufacturing Contribution Margin Income Statement (Variable Costing) (a) Year 1 (b) Year 2 Less Less Herring Manufacturing manufactures a single product that it will sell for $90 per unit. The company is looking to project its During its first year of operations, the company plans to manufacture 25,000 units and anticipates selling 19,000 of those operating income for its first two years of operations. Cost information for the single unit of its product is as follows: units. During the second year of its operations, the company plans to manufacture 25,000 units and anticipates selling 30,000 units (it has units in beginning inventory for the second year from its first year of operations). (Cilick the icon to view the data.) Read the reguirements Requirement 1. Prepare an absorption costing income statement for (a) the first year of operations and (b) the second year of operations Herring Manufacturing Income Statement (Absorption Costing) (a) Year 1 (b) Year 2 Sales revenue Less: Cost of goods Gross profit Less: Operating expenses 17100002700000 income Requirement 2. Before you prepare the variable costing income statements for Herring, 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 years 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 uni. 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 Requirement 3. Prepare a variable costing income statement for (a) the first year of operations and (b) the second year of operations. Herring Manufacturing Contribution Margin Income Statement (Variable Costing) (a) Year 1 (b) Year 2 Less Less