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AFN Company produces plastic that is used for injection-moulding applications such as gears for small motors. In 2020, the first year of operations, AFN Company produced 5,000 tonnes of plastic and sold 3,550 tonnes. In 2021, the production and sales results were exactly reversed. In each year, the selling price per tonne was $1,900; variable manufacturing costs were 16% of the sales price for the units produced; variable selling expenses were 9% of the selling price of the units sold; fixed manufacturing costs were $3,550,000; and fixed administrative expenses were $600,000.

Prepare comparative income statements for each year using variable costing. (Use the format from Illustration 8.5.) AFN COMPANY Income StatementVariable Costing Number of units manufactured 5000 3550 Number of units sold 3550 5000 Sales $ 6745000 $ 9500000 Less 9 : Variable costs Inventory, beginning $ 0 Add : Costs of goods manufactured 855000 Cost of goods available for sale 855000 Less c : Inventory, ending 2755000 4! Variable cost of goods sold Variable selling and administrative costs $ Total variable costs Contribution margin c Less : Fixed costs 1} Net income 4) '9'} 4*}