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O'Brien 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$29Direct labor$14Variable manufacturing overhead$3Variable selling and administrative$3Fixed costs per year:Fixed manufacturing overhead$550,000Fixed selling and administrative expenses$140,000

During its first year of operations, O'Brien produced 97,000 units and sold 80,000 units. During its second year of operations, it produced 80,000 units and sold 92,000 units. In its third year, O'Brien produced 85,000 units and sold 80,000 units. The selling price of the company's product is $74 per unit.

2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first):

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.