Sheldon & Co manufactures and sells a single product. Current year sales volume was 50,000 units at a selling price of $86 per unit. Direct materials and direct labour amount to $28 per unit. Variable manufacturing overhead costs were $13 per unit plus fixed costs of $455000 per year. there were no beginning inventory and 65,000 units were produced during the year. Variable selling and administrative costs were $5 per unit sold plus fixed costs of $765,000 for the year. Prepare a formal variable costing income statement for the year.

A. Prepare a formal variable costing income statement for the year.

B. Prepare a formal absorption costing income statement for the year.

C. Reconcile the absorption costing and variable costing income figures for the year.

Identify the difference.