Suiran Inc. manufacturing division produces small size speakers with the companys logo. Mr. Presley, the companys general manager, has asked you to prepare income statements for the Logitech model using both variable costing and absorption costing. You have been given the following data for the past year:

Beginning Inventory	3,000 units
Actual Production	23,000 units
Ending Inventory	8,800 units
Manufacturing Costs:
Direct Material	$8/unit
Direct Labour	$4/unit
Variable Overhead	$1.5/unit
Fixed Overhead	$99,000/year
Non-manufacturing Costs:
Variable Selling and Admin	$3/unit
Fixed Selling and Admin	$24,300/year

Fixed costs are allocated to production under absorption costing based on planned production of 22,000 units for the year. Planned production has been set at 22,000 for the past two years. Any over or under applied overhead is allocated directly to COGS. Each Logitech provides a contribution margin of $6.50.

Required:

Using the above information:

1. Calculate the unit product cost under both the variable costing method and the absorption costing method
2. Prepare two Income Statements; one using variable costing (5 marks) and the other using absorption costing
3. Reconcile the variable costing net income (or loss) with the absorption costing net income (or loss)