Problem B My Company produced 26,000 units during February. Direct materials costs are $3.75 per unit and direct labor is $4.50 per unit. Variable overhead is applied at $5 per unit and fixed overhead is $65,000 per month. Sales commissions are $0.75 per unit sold. Sales salaries for the month are $50,000 and fixed administrative expenses are $100,000.

1. Calculate production cost per unit under variable and absorption costing.

2. Prepare an income statement under variable costing and under absorption costing for February assuming all 26,000 units produced were sold for $25 each.

3. During March, My Company produced 26,000 units and sold 20,000 units. Prepare an income statement under variable and under absorption costing for March assuming each unit sold for $25 each.

4. Is the February net income different under each method? Why or why not? What about March, is the net income different? Why or why not?