Naya Company produces and sells a single product. The cost and operating data for the product relating to 2020 and 2021 are as given below:

Direct Material cost per unit $22

Direct Labor cost per unit $12

Variable Overhead cost per unit $ 6

Variable Selling and Administrative Cost $ 8

Fixed Overhead cost per year $ 240,000

Fixed Selling and Administrative Cost per year $ 140,000

Selling price per unit $ 100

Production and sales data: 2020 2021

Units produced during the year 20,000 12,000

Units sold during the year 16,000 14,000

The company had no beginning inventory in 2020. In 2021, direct material cost and direct labor cost per unit increased to $25 and $15 respectively. In addition, Variable overhead cost and variable selling and administrative cost each increased by 50%.

Required:

1. Determine the unit product cost in each year using
   1. Absorption costing
   2. Variable costing
2. Prepare the income statement for each year using
   1. Absorption costing
   2. Variable costing
3. Reconcile the variable costing and the absorption costing net operating income.