Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead $ $ esesses es $ 24 21 454 15 3 $400,000 Fixed selling and administrative expenses $ 70,000 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 $60 per unit. Required: 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. Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 3 Assume the company uses variable costing. Prepare an income statement for Year 1 and Year 2. Sales Walsh Company Income Statement Year 1 Year 2 $ $ 3,000,000 2,400,000 Variable expenses: Variable cost of goods sold 1,720,000 2,150,000 Variable selling and administrative 120,000 150,000 Total variable expenses Contribution margin Fixed expenses: Fixed selling and administrative expense Fixed manufacturing overhead Total fixed expenses Net operating income (loss) 1,840,000 2,300,000 560,000 700,000 70,000 70,000 400,000 400,000 470,000 470,000 $ 90,000 $ 230,000 Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 3 Assume the company uses absorption costing. Prepare an income statement for Year 1 and Year 2. (Round your intermediate calculations to 2 decimal places.) Sales Cost of goods sold Gross margin Walsh Company Income Statement Year 1 Year 2 $ 2,400,000 $ 3,000,000 2,040,000 2,650,000 360,000 Selling and administrative 190,000 220,000 expenses Net operating income (loss) $ 170,000 $ (220,000) Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 3 Reconcile the difference between variable costing and absorption costing net operating income in Year 1. (Enter any losses or deductions as a negative value.) Variable costing net operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing net operating income (loss) Year 1 Year 2 $ 90,000 $ 230,000 80,000 (100,000) $ 170,000 $ 130,000