Karen White, CEO of Crane Industries, is concerned about the recent volatility in the company's operating income. She believes that since the number of units sold has been fairly stable over the past three years that operating income also should have been stable. Karen asked Paul Harris, Crane's inventory manager, to help her understand the issue. Paul reviewed the company's records and compiled the following changes to Finished Goods Inventory (in units) for the years 2019, 2020, and 2021. Year 2019 2020 2021 Beginning inventory 1,000 2,000 500 Production 40,000 38,000 40,000 Sales (39,000) (39,500) (39,500) Ending inventory 2,000 500 1,000 Paul also gathered the 2019 income statements prepared using absorption costing and variable costing, which follow. Income Statement-Absorption Costing Sales Cost of goods sold $ 5,850,000 Units in beginning inventory (93,000) Units sold from current year production (3,534,000) Sales Cost of goods sold $ 5,850,000 Units in beginning inventory (93,000) Units sold from current year production (3,534,000) Total cost of goods sold (3,627,000) Gross margin Selling expense Operating Income 2,223,000 (625,000) $ 1,598,000 Income Statement-Variable Costing Sales Variable production expenses Variable selling expenses Contribution margin Fixed manufacturing expenses Fixed selling expenses Operating income $ 5,850,000 (2,145,000) (273,000) 3,432,000 (1,520,000) (352,000) $ 1,560,000 (a) Your answer is correct. Compute the unit product cost for 2019, 2020, and 2021 for variable and absorption costing. Assume that variable costs per unit and total fixed costs do not change from one year to the next. (Round answers to 2 decimal places, e.g. 15.25.) 2019 2020 2021 Unit product cost using 55 55 $ 55 variable costing Unit product cost using $ 93 95 $ 93 absorption costing (b) eTextbook and Media Attempts: 1 of 3 used Prepare variable and absorption costing income statements for 2020 and 2021. Assume that sales price remains constant across all years. (Round answers to O decimal places, e.g. 5,275.) (b) Prepare variable and absorption costing income statements for 2020 and 2021. Assume that sales price remains constant across all years. (Round answers to O decimal places, e.g. 5,275.) Income Statement-Absorption Costing Sales Cost of goods sold Gross margin Variable costs-selling Fixed selling costs Operating Income Income Statement-Variable Costing 2020 1- 2021 2020 2021 I Income Statement-Variable Costing Sales Variable costs-production Variable costs-selling Contribution margin Fixed selling costs Fixed manufacturing costs v Operating Income $ 2020 2021