PROBLEM 6-18 Variable and Absorption Costing Unit Product Costs and Income Statements Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year Fixed manufacturing overhead Fixed selling and administrative expenses $20 $12 $4 $2 $960,000 $240,000 During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40.000 units and sold 65,000 units. The selling price of the company's product is $58 per unit Required: 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1. Year 2. and Year 3 b. Prepare an income statement for Year 1 Year 2 and Year 3. 3. Assume the company uses absorption costing. a. Compute the unit product cost for Year 1. Year 2 and Year 3. b. Prepare an income statement for Year 1 Year 2 and Year 3. Problem 6-18: Variable and Absorption Costing Data Selling price per unit $58 Variable Costs per Unit Manufacturing costs: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $20 $12 $4 $2 Fixed Costs per Year: Fixed manufacturing overhead per year Fixed selling and administrative expenses $960,000 $240,000 Units produced during the year Units sold during the year Year 1 60,000 60,000 Year 2 75,000 50,000 Year 3 40,000 65,000 Compute the Ending Inventory Year 1 Year 2 Year 3 Units in beginning inventory Units produced during the year Units sold during the year Units in ending inventory Year 2 Year 3 Compute the Variable Costing Unit Product Cost Year 1 Direct materials Direct labor Variable manufacturing overhead Variable costing unit product cost Year 2 Year 3 Construct the Variable Costing Income Statement Year 1 Sales Variable expenses: Variable cost of goods sold Variable selling and administrative expenses Total Variable Expenses Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses Total Fixed Expenses Net operating income Compute the Absorption Costing Unit Product Cost Year 1 Year 2 Year 3 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Absorption costing unit product cost Construct the Absorption Costing Income Statement Year 1 Year 2 Year 3 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income