Stark, Inc., produces and sells a unique robot antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been reported for the first month of the new plant's operation:

Selling price	$108
Beginning inventory	0
Units produced	35,000
Units sold	30,000
Selling price per unit	$50
Selling and Admin expenses:
Variable per unit	$2
Fixed (total)	$360,000
Manufacturing costs:
Direct material cost per unit	$9
Direct labour cost per unit	$8
Variable overhead cost per unit	$3
Fixed overhead cost (Total)	$350,000

Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month. Assume that direct labour is a variable cost.

Submission instructions:

• Assuming that the company uses absorption costing, compute the unit product cost and prepare an income statement.
• Assuming that the company uses variable costing, compute the unit product cost and prepare an income statement.
• Explain the reason for any difference in the ending inventories under the two costing methods and the impact of this difference on reported operating income.