Hurdle, Inc. has developed a new design to produce hurdles that are used in track and field competition. The company's hurdle design is innovative in that the hurdle yields when hit bya runner and its height is extraordinarily easy to adjust. Management estimates expected annual capacity to be 90,000 units; overhead is applied using expected annual capacity. The company's. cost accountant predicts the following current year activities and related costs: Standard unit variable manufacturing costs* Variable unit selling expense Fixed manufacturing overhead Fixed selling and administrative expenses Selling price per unit Units of sales Units of production Units in beginning inventory $12- $5 $495,000 $136,000 $35 80,000 85,000 10,000 Other than any possible under- or overapplied fixed overhead, management expects no variances from the previous manufacturing costs. Under- or overapplied fixed overhead is to be written off to Cost of Goods Sold. Required: 1. Determine the amount of under- or overapplied fixed overhead using (a) variable costing and (b) absorption costing. Prepare projected income statements using (a) variable costing and (b) absorption costing. 2