Question 3 Not complete Marked out of 10.00 Remove flag Absorption and Variable Costing Comparisons: Sales Exceed Production Wright Development purchases, develops, and sells commercial building sites. As the sites are sold, they are cleared at an average cost of $8,000 per site. Storm drains and driveways are also installed at an average cost of $10,000 per site. Selling costs are 6% of sales price. Administrative costs are $600,000 per year. Two years ago, the company bought 2,000 acres of land for $7,500,000 and divided it into 200 sites of equal size. During that year, 95 sites were sold at an average price of $150,000. Last year, the company purchased and developed another 2,000 acres, divided into 200 sites. The purchase price was again $7,500,000. Sales totaled 250 sites last year at an average price of $150,000. Required a. Prepare functional income statements using absorption costing for each of the two years. Use a negative sign only to indicate a net loss for income. Otherwise, do not use negative signs with your answers. Functional (Absorption Costing) Income Statements (in thousands, except site data) Wright Development Comparative Year 1 Year 2 Sales Cost of sales Gross profit $ 0 $ 0 0 Selling and administrative expenses: 0 0 $ 0 $ 0 Net income (loss) b. Prepare contribution income statements using variable costing for each of the two years. Use a negative sign only to indicate a net loss for income. Otherwise, do not use negative signs with your answers. Wright Development Contribution Income Statements (in thousands, except site data) Comparative Year 1 Year 2 Sales $ 0 $ 0 Variable costs 0 0 Contribution margin 0 0 Fixed expenses 0 0 Net income (loss) $ 0 $ 0