Problem 4 The Fabulous Corporation produces and sells a single product. The following data refer to the first two years of activity: Year 1 Year 2 Units in beginning inventory 0 2,000 Units produced during the year 9,000 9000 Units sold during the year 7,000 10,000 Units in ending inventory 2,000 1,000 Selling price per unit $ 47 Selling and administrative expenses: Variable per unit $ 4 Fixed per year $ 58,000 Manufacturing costs: Direct materials cost per unit $ 10 Direct labor cost per unit $ 6 Variable manufacturing overhead cost per unit $ 5 Fixed manufacturing overhead per year (applied at the rate of $10 per unit) $ 90,000 Required: a. Assume the company uses absorption costing: Compute the unit product cost in each year Prepare an income statement for each year b. Assume the company uses variable costing: Compute the unit product cost in each year Prepare an income statement for each year c. Reconcile the absorption costing and variable costing net operating income