Required:

Assume the company uses variable costing:

a$.$ Compute the unit product cost for Year $1$ and Year $2.$

b$.$ Prepare an income statement for Year $1$ and Year $2.$

Assume the company uses absorption costing:

a$.$ Compute the unit product cost for Year $1$ and Year $2.$

b$.$ Prepare an income statement for Year $1$ and Year $2.$

Reconcile the difference between variable costing and absorption costing net operating income in Year $1$ and Year $2.$

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Req $1A$

Req $1$B

Req $2$B

Req $3$

Reconcile the difference between variable costing and absorption costing net operating income in Year $1$ and Year $2.$

Note: Enter any losses or deductions as a negative value.Walsh Company manufactures and sells one product. The following information pertains to each of the company$$s first two years of operations:

Variable costs per unit:

Manufacturing:

Direct materials $ $22$

Direct labor $ $16$

Variable manufacturing overhead $ $5$

Variable selling and administrative $ $4$

Fixed costs per year:

Fixed manufacturing overhead $ $320,000$

Fixed selling and administrative expenses $ $80,000$

During its first year of operations, Walsh produced $50,000$ units and sold $40,000$ units. During its second year of operations, it produced $40,000$ units and sold $50,000$ units. The selling price of the company$$s product is $$53$ per unit.

Required:

Assume the company uses variable costing:

Compute the unit product cost for Year $1$ and Year $2.$

Prepare an income statement for Year $1$ and Year $2.$

Assume the company uses absorption costing:

Compute the unit product cost for Year $1$ and Year $2.$

Prepare an income statement for Year $1$ and Year $2.$

Reconcile the difference between variable costing and absorption costing net operating income in Year $1$ and Year $2.$