Summarized data for 2016 (the first year of operations) for Trenton Products, Inc., are as follows:

Sales (200,000 units) ...................................... $8,000,000

Production costs (210,000 units): $ Per Unit

Direct material.......................................... 2,100,000 $10.00

Direct labor ............................................ 1,680,000 8.00

Manufacturing overhead:

Variable ............................................... 1,260,000 6.00

Fixed ................................................. 1,050,000 5.00

Operating expenses:

Variable ............................................... 560,000 2.80*

Fixed ................................................. 640,000

*Based on 200,000 units

Please note that you are given the unit DM, DL and variable manufacturing overhead. Also note that you are given the fixed manufacturing overhead AND the unit fixed manufacturing overhead that you need for the absorption unit product cost. Unit fixed manufacturing cost = total fixed overhead/units Produced. The math is already done for you. The real world, people will give many things, much wrong your job is to find the relevant information and move on.

Required

a. Prepare an income statement based on full absorption costing.

b Prepare an income statement based on variable costing

c. Reconcile the absorption costing and variable costing net operating income figures