The following information has been extracted from Universal Inc.'s financial records for its first year of operations:

Units produced10,000

Beg. Finished Goods Inventory0

Units sold7,000

Sales Price per Unit$100

Variable costs per unit:Fixed costs for year:

Direct Materials$8Overhead$70,000

Direct Labor9Marketing & Admin30,000

Overhead3

Selling4 per unit sold

Required:

1. Compute the manufacturing cost of one unit using theVariable Costingmethod.

2. Compute the manufacturing cost of one unit using theAbsorption Costingmethod.

3. Prepare the Income Statement under both methods.

4. Reconcile the difference in Operating Income between the 2 methods (be VERY specific and use numbers to reconcile.)