Stravinsky Corporation has provided the following data for its two most recent years of operation:

Years 1 & 2

	Selling price per unit	$90
	Manufacturing costs:
	Variable manufacturing cost per unit produced:
	Direct materials	$13
	Direct labor	$6
	Variable manufacturing overhead	$4
	Fixed manufacturing overhead per year	$224,000
	Selling and administrative expenses:
	Variable selling and administrative expense per unit sold	$5
	Fixed selling and administrative expense per year	$74,000

		Year 1	Year 2
	Units in beginning inventory	0	1,000
	Units produced during the year	8,000	7,000
	Units sold during the year	7,000	5,000
	Units in ending inventory	1,000	3,000

Required:

a. Assume the company uses absorption costing. Compute the unit product cost in each year.

(Hint: Fixed mfg. OH cost per unit is calculated based on the number of units produced each year.)

b. Assume the company uses absorption costing. Prepare an income statement for each year.

(Hint: For calculating the CGS in year 2, remember that the units sold from last years ending inventory should be costed using last years unit cost + units produced and sold this year are costed at year 2 unit cost.)

c. Assume the company uses variable costing. Compute the unit product cost in each year.

d. Assume the company uses variable costing. Prepare an income statement for each year.