Scott Manufacturing makes only one product with total unit manufacturing costs of $58, of which $40 is variable. No units were on hand at the beginning of Year 1. During Year 1 and Year 2, the only product manufactured was sold for $91 per unit, and the cost structure did not change. Scott uses the first-in, first-out inventory method and has the following production and sales for Year 1 and Year 2 Units Manufactured Units Sold 120,000 90,000 120,000 130,000 Year 1 Year 2 a. Prepare gross profit computations for Year 1 and Year 2 using absorption costing Do not use negative signs with your answers. Sales Cost of goods sold: Beginning inventory Production Absorption Costing Year 1 Goods available Less: Ending inventory Cost of goods sold Gross profit h Prona $ $ $ $ Year 2

\begin{tabular}{|c|c|c|} \hline & Unibs Monefactured & Units Sold \\ \hline & 120,000 & to 090 \\ \hline Weir 2 & 120000 & wosdos \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline \\ \hline & 1 & 1 \\ \hline Cunt if eopt & & \\ \hline Beprining & & \\ \hline & & \\ \hline & & \\ \hline Las Gsing & & \\ \hline Contelf & & \\ \hline Comprofic & 5 & i \\ \hline \end{tabular} b. Prepare gross profit computations for Year 1 and Year 2 using variable costing Donotuse negavive signs with your answers. Select the most appropriate statement: Iproduction volume exceds sults volume, the absorption costing gross profit wil be boger than the warable costing gross profit I sales volume exceds production volume, the absorption costing goss profic will be heger than the wanable costing gross profi. f production volume esceeds siles volume, the varade costing gross profit with be higher than the absorption costing gross profh