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Security Technology Inc. (STI) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police
Security Technology Inc. (STI) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police and military applications. The part sells for $55 per unit and had sales of 24,000 units in the year, 2022. STI is projecting sales of 26,500 units in 2023. STI is planning the same production level for 2023 as in 2022 of 25,000 units. The variable manufacturing costs for STI are $10 direct materials and $6. direct labour, and the variable selling costs are only $0.50 per unit. The fixed manufacturing costs are $200,000 per year and the fixed selling costs are $500 per year. In 2021, STI did not not have any beginning inventory and produced 27,000 units, with sales of 26,500. Total fixed costs, and variable cost per unit remained the same for all three years. 1. Prepare an income statement for each year 2022, and 2023 using full costing. 2. Prepare an income statement for each year 2022, and 2023 using variable costing. 3. Prepare a reconciliation and explanation of the difference each year in the operating income resulting from the full- and variable-costing methods
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