Problem 1. Square Firm makes and markets triangles. The firm's cost structure is as follows:

Manufacturing cost = $8.75 per unit + $105,825 per month.

Selling and administrative cost = $2.85 per unit + $45,800 per month

At the end of January, the firm had 2,700 units in inventory with a total cost of $23,625.During February, the firm produced 8,500 units and sold 6,500.The selling price is $36.90 per unit.

Assume the firm uses variable costing. Prepare a income statement for the month of February.

Problem 2. Triangle Firm makes and markets squares. The firm's cost structure is as follows:

Manufacturing cost = $8.75 per unit + $105,825 per month.

Selling and administrative cost = $2.85 per unit + $45,800 per month

At the end of January, the firm had 2,700 units in inventory with a total cost of $35,856.During February, the firm produced 8,500 units and sold 6,500.The selling price is $36.90 per unit.

Prepare an income statement assuming absorption costing for the month of February.

Problem 3. Prepare a reconciliation of the variable costing net income from Problem 1 and the absorption costing net income from Problem 2.