Tom Nook Inc. is selling brand new island homes to customers of Dodo Airlines. Operating data for the company and its absorption costing income statements for the last two years are presented below. Monetary units have been converted from Bells to US Dollars.

	Year 1	Year 2
Units in beginning inventory	0	10
Units produced	50	50
Units sold	40	60
Sales	$350,000	$525,000
Cost of goods sold	$240,000	$360,000
Gross Margin	$110,000	$165,000
Selling and administrative expenses	$60,000	$80,000
Net operating income	$50,000	$85,000

For both years: $85,000 Variable manufacturing costs are $4,000 per unit. Fixed manufacturing overhead was $100,000 in each year. This fixed manufacturing overhead was applied at a rate of $2,000 per unit. Variable selling and administrative expenses were $1 per unit sold.

a) Compute the unit product cost in Year 2 under variable costing.

b) Compute the unit product cost in Year 1 under absorption costing.