Navaroli Company began operations in January 5, 2018. Cost and sales information for its first two calendar years of operations are summarized below:

Manufacturing costs Production and sales data

Direct Materials $80 per unit Units produced, 2018 200,000 units

Direct Labor $120 per unit Units sold, 2018 140,000 units

Factory Overhead costs: 2018 ending inventory 60,000 units

Variable $30 per unit Units produced, 2019 80,000 units

Fixed per year $14,000,000 Units sold, 2019 140,000 units

Selling & Administrative costs: 2019 ending inventory 0 units

Variable $10 per unit Sales price per unit $600 per unit

Fixed per year $8,000,000

1. Prepare an income statement for 2018 under absorption costing
2. Prepare an income statement for 2018 under variable costing
3. Explain the difference in reported income under the two costing methods
4. Prepare an income statement for 2019 under absorption costing
5. Prepare an income statement for 2019 under variable costing
6. Prepare a schedule to convert variable costing income to absorption costing for each year