Sims Company, a manufacturer of tablet computers, began operations on January 1, 2015. Its cost and sales information for this year follows.

Manufacturing costs
Direct materials	$	35	per unit
Direct labor	$	55	per unit
Overhead costs for the year
Variable overhead	$	4,200,000
Fixed overhead	$	6,300,000
Selling and administrative costs for the year
Variable	$	800,000
Fixed	$	4,500,000
Production and sales for the year
Units produced		105,000	units
Units sold		75,000	units
Sales price per unit	$	360	per unit

1.	Prepare an income statement for the year using variable costing.

2.	Prepare an income statement for the year using absorption costing.

3.

Under what circumstance(s) is reported income identical under both absorption costing and variable costing?

	Production is greater than sales and inventory levels increase
	Production is greater than sales and inventory levels decrease
	Production equals sales and there is no beginning finished goods inventory
	Production is less than sales and inventory levels decrease
	Incomes of absorption costing and variable costing will never be identical