Variable costs per unit:

Manufacturing:

Direct materials $ $26$

Direct labor $ $12$

Variable manufacturing overhead $ $5$

Variable selling and administrative $ $4$

Fixed costs per year:

Fixed manufacturing overhead $ $240,000$

Fixed selling and administrative expenses $ $80,000$

During its first year of operations, Walsh produced $50,000$ units and sold $40,000$ units. During its second year of operations, it produced $40,000$ units and sold $50,000$ units. The selling price of the company$$s product is $$56$ per unit.$\backslash$

$1.$ Assume the company uses variable costing:

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

b$.$ Prepare an income statement for Year $1$ and Year $2.$

$2.$ 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 $2.$

$3.$ Reconcile the difference between variable costing and absorption costing net operating income in Year $1.$