Sivan Co. manufactures and sells one product. For the year, they started with no opening inventory; produced 100,000 units, but only sold 70,000 units. The selling price per each unit is $60.

The variable costs per unit were:

Direct materials.........................7

Direct Labor .............................6

Variable manufacturing overhead ....5

Variable selling and administrative6

Fixed costs per year:

Fixed manufacturing Overhead ................$700,000

Fixed Selling and Administrative expenses.. $300,000

(a) Prepare the Income Statement using Absorption Costing.

(b) Prepare the Income Statement using Variable Costing