The EG Company produces and sells one product: a microwave oven. The following data refer to the year just completed:

Beginning inventory	$0
Units produced	25,000
Units sold	20,000
Sales price per unit	$400
Selling and administrative expenses:
Variable per unit	$15
Fixed (total)	$275,000
Manufacturing costs:
Direct materials cost per unit	$200
Direct labour cost per unit	$50
Variable overhead cost per unit	$30
Fixed overhead (total)	$300,000

Assume that direct labour is a variable cost. Required: Make sure that you show all of your calculations for full marks and that they are properly labeled. a) [3.5 Marks] Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.

b) [3.0 Marks] Prepare an income statement for the year using absorption costing. It must be properly labeled for full marks.

c) [3.5 Marks] Prepare an income statement for the year using variable costing. It must be properly labeled for full marks.

d) [1 Mark] What explains the difference between net income calculated using absorption costing and net income calculated using variable costing in this question? The difference can be explained in one sentence.