i cant figure out year three for 2b

Starfax, Inc. Variable Costing Income Statement Year 1 Year 2 Year 3 Sales $ 1,040,000 $ 882,000 $ 1,040,000 Variable expenses: Variable cost of goods sold 160,000 144,000 160,000 Variable selling and administrative expenses 80,000 72,000 80,000 240,000 240,000 216,000 666,000 800,000 800,000 Total variable expenses Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses 720,000 720,000 70,000 720,000 70,000 70,000 790,000 Total fixed expenses Net operating income (loss) 790,000 790,000 10,000 $ (124,000) $ $ 10,000 Required: 1. Prepare a variable costing income statement for each year. 2. Refer to the absorption costing income statements above. a. Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how much is fixed. b. Reconcile the variable costing and absorption costing net operating income figures for each year. 5b. If Lean Production had been used during Year 2 and Year 3, what would the company's net operating income (or loss) have been in each year under absorption costing? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Reg 2B Req 5B Reconcile the variable costing and absorption costing net operating income figures for each year. (Enter any losses or deductions as a negative value.) Year 3 $ 10,000 Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating income (loss) $ $ 10,000 (124,000) Add fixed manufacturing overhead deferred in inventory 0 144,000 Deduct fixed manufacturing overhead cost released from inventory 0 0 Absorption costing net operating income (loss) $ 10,000 $ 20,000 0 Chec Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers. Results for the first three years of operations were as follows (absorption costing basis): Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income (loss) Year 1 $1,040,000 880,000 160,000 150,000 Year 2 $ 882,000 720,000 162,000 142,000 $ 20,000 Year 3 $1,040,000 924,000 116,000 150,000 $ 10,000 $ (34,000) In the latter part of Year 2, a competitor went out of business and in the process dumped a large number of units on the market. As a result, Starfax's sales dropped by 10% during Year 2 even though production increased during the year. Management had expected sales to remain constant at 40,000 units; the increased production was designed to provide the company with a buffer of protection against unexpected spurts in demand. By the start of Year 3, management could see that it had excess inventory and that spurts in demand were unlikely. To reduce the excessive inventories, Starfax cut back production during Year 3, as shown below: Production in units Sales in units Year 1 40,000 40,000 Year 2 45,000 36,000 Year 3 36,000 40,000 Additional information about the company follows: a. The company's plant is highly automated. Variable manufacturing expenses (direct materials, direct labor, and variable manufacturing overhead) total only $4.00 per unit, and fixed manufacturing overhead expenses total $720,000 per year. b. A new fixed manufacturing overhead rate is computed each year based that year's actual fixed manufacturing overhead costs divided by the actual number of units produced. c. Variable selling and administrative expenses were $2 per unit sold in each year. Fixed selling and administrative expenses totaled $70,000 per year. Req 1 Req 2A Req 2B Req 5B Reconcile the variable costing and absorption costing net operating income figures for each year. (Enter any losses or deductions a negative value.) Year 3 $ 10,000 Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating income (loss) $ 10,000 (124,000) Add fixed manufacturing overhead deferred in inventory 144,000 Deduct fixed manufacturing overhead cost released from inventory Absorption costing net operating income (loss) $ 10,000 $ 20,000 0 0 0 0