Jay & Jay Company produces a single product. Its income statements under absorption costing for its first two years of operation follow.

Income Statements (Absorption Costing)Year 1Year 2Sales ($46 per unit)$ 920,000$ 1,840,000Cost of goods sold ($31 per unit)620,0001,240,000Gross profit300,000600,000Selling and administrative expenses170,000220,000Income$ 130,000$ 380,000

Additional Information

1. Sales and production data for these first two years follow.

UnitsYear 1Year 2Units produced30,00030,000Units sold20,00040,000

1. Variable costs per unit and fixed costs per year are unchanged during these years. The companys $31 per unit product cost using absorption costing consists of the following.

Direct materials$ 5Direct labor9Variable overhead7Fixed overhead ($300,000/30,000 units)10Total product cost per unit$ 31

1. Selling and administrative expenses consist of the following.

Selling and Administrative ExpensesYear 1Year 2Variable selling and administrative ($2.50 per unit sold)$ 50,000$ 100,000Fixed selling and administrative120,000120,000Total$ 170,000$ 220,000

Required: Prepare income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.)