Oriole Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2017, included product X. Relevant per-unit data for product X are as follows.

Estimated selling price$49Cost38Estimated selling costs15Normal profit9

There were1,050units of product X on hand at December 31, 2017. Product X was incorrectly valued at $38per unit for reporting purposes. All1,050units were sold in 2018.

Compute the effect of this error on net income for 2017 and the effect on net income for 2018, and indicate the direction of the misstatement for each year.