Q 3: Lukin Corporation reports the following first-year production cost information:

Sales Price	$30 per unit
direct labor	$2 per unit
direct materials	$3 per unit
variable overhead	$4 per unit
sales commission	$15,000
administrative costs	$12,000 of which $1,000 fixed cost
fixed overhead	$9,000

1. Prepare income statements using both variable and absorption costing for sales of 20,000 unit in 2019 for production 30,000 units. (10 point)
2. Does the amount of income differ between the variable cost methods and the absorption method? Explain. (5 point)
3. Income report under variable cost method shows that; When the units produced equal units sold in 2018 (30,000 units), the income is $594,000. Furthermore, the income was $388,000 in 2020 as well, when units produced were 8,000 less than units sold. Managers make a decision to convert reports under variable costs to absorption method reports. (5 point)