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 $64 per unit and had sales of 24,450 units in the current year, 2018. STI has no inventory on hand at the beginning of 2018 and is projecting sales of 27,350 units in 2019. STI is planning the same production level for 2019 as in 2018, 25,900 units. The variable manufacturing costs for STI are $25, and the variable selling costs are only $0.70 per unit. The fixed manufacturing costs are $207,200 per year, and the fixed selling costs are $590 per year.

Required:

1. Prepare an income statement for each year using full costing.

2. Prepare an income statement for each year using variable costing.

3. Prepare a reconciliation of the difference each year in the operating income resulting from the full and variable costing methods.

Prepare an income statement for each year using variable costing.

Required 1 Required 2 Required 3 Prepare an income statement for each year using full costing. (Round your final answers to nearest whole dollar amount.) SECURITY TECHNOLOGY INC. Full Costing Income Statement 2018 2019 Less: Cost of goods sold Available for sale Cost of goods sold Gross margin Less: Selling and administrative costs Operating income SECURITY TECHNOLOGY INC. Variable Costing Income Statement 2018 2019 Less: Cost of goods sold Available for sale Cost of goods sold Contribution margin Less: Selling and administrative costs Operating income Prepare a reconciliation of the difference each year in the operating income resulting from the full and variable costing methods. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your "Fixed overhead rate" answers to 2 decimal places, and other final answers to nearest whole dollar amount.) SECURITY TECHNOLOGY INC. Reconciling Difference in Operating Income Between Full and Variable Costing 2018 Change in inventory in units Multiply times fixed overhead rate 2019 Difference in operating income