Problem 4 (20 points) Brandon Company has beginning inventory of 10,000 units. In 2016 Kylie Company produced 21,000 units but planned to produce 23,880 units. Variable manufacturing overhead was $25 per unit. Fixed manufacturing costs were $3,582,000 and fixed marketing costs were $618,000. Variable marketing costs for $300 per unit sold. Kylie had 6,000 units left in ending inventory. Direct material and direct labor costs were $300 and $200 per unit, respectively. Kylie Company has a tax rate of 40%. All variances are written off of COGS, the allocation base is units produced, and current year's budgets per unit production cost is the same as prior year's per unit production cost. Required 1. Under a variable costing system, what is the selling price if net income is $0 and what is variable cost of goods sold? (10pts) 2. Prepare the absorption income statement assuming the same selling price calculated in part 1. What are net income and cost of goods sold? (10pts) Variable Costing Revenue Variable Cost of Goods Sold Beginning Inventory Variable manufacturing costs Cost of Goods Available for Sale Deduct Ending Inventory Variable Cost of Goods Sold Variable Marketing Costs Contribution Margin Fixed manufacturing costs Fixed marketing costs Operating Income Absorption Costing Revenue Variable Cost of Goods Sold Beginning Inventory Variable manufacturing costs Allocated fixed manufacturing costs Cost of Goods Available for Sale Deduct Ending Inventory Variance Adjustment Cost of Goods Sold Gross Margin Variable Marketing Costs Fixed marketing costs Operating Income Income Tax Expense