Oak Mart, a producer of solid oak tables, reports the following data from its second year of business.

Sales price per unit $ 300 per unit Units produced this year 110,000 units Units sold this year 113,000 units Units in beginning-year inventory 3,000 units Beginning inventory costs Variable (3,000 units $135) $ 405,000 Fixed (3,000 units $70) 210,000 Total $ 615,000 Manufacturing costs this year Direct materials $ 48 per unit Direct labor $ 62 per unit Overhead costs this year Variable overhead $ 3,400,000 Fixed overhead $ 7,200,000 Selling and administrative costs this year Variable $ 1,500,000 Fixed 4,400,000

2. Prepare the current-year income statement for the company using absorption costing.

Beginning inventor}.I 015,000 Direct materials 5280,000 = ==_ Total selling general and administrative expenses Net income (loss) 685 000 et income under van'able costing is higher than net income under absorption costing by: Number of units added to{subtracted from) inventory Fixed costs added to(subtracted from} inventory