Mustang Products has just perfected a product which it can sell for $20 per unit. Mustang's economist forecasts that demand for this unique product will be 8 in 20X1 and 11 in 20X2. Production costs are estimated as follows:

	20X1	20x2
Fixed (in total)	$ 10	$ 10
Variable (per unit)	5	7

Because Mustang's production facilities can accommodate only a single worker per shift, only 10 jerseys are turned out annually. Mustang uses the FIFO inventory method.

(1). Using absorption costing. Mustang's net income for 20X1 would be ?

(2). Using absorption costing. Mustang's net income for 20X2 would be ?

(3). Using absorption costing. Mustang's ending inventory for 20X2 would be ?

(4). Using variable costing. Mustang's net income for 20X1 would be ?

(5). Using variable costing. Mustang's net income for 20X2 would be ?

(6) Using variable costing. Mustang's ending inventory for 20X2 would be ?

Which method, absorption costing (AC) or variable costing (VC) would provide the Higher net income under each of the following circumstances:

(7). Sales are equal to production ____________

(8). Sales are greater than production _____________

(9). Production is greater than sales_______________

(10). Which method, absorption costing (AC) or variable costing (VC) would always prodvide the Higher Inventory amount? why?