Tec Industries manufactures and sells one product. The following information pertains to each of the companys first two years of operations:

Variable costs per unit: Manufacturing: Direct Materials $ 35 Direct Labor $ 25 Variable manufacturing overhead $ 7 Variable Selling and administrative $ 5 Fixed costs per year: Fixed manufacturing overhead $ 320,000 Fixed selling and administrative expenses $ 125,000

During its first year of operations, BIA produced 40,000 units and sold 30,000 units. During its second year of operations, BIA produced 40,000 and sold 50,000 units. The selling price of the companys product is $100 per unit.

2) Assume the company uses Absorption Costing.

a. Compute the unit product cost for Year 1 and Year 2.

b. Prepare an income statement for Year 1 and Year 2 using Absorption Costing.

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