walsh company manufactures and sells one product.

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 S Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 24 $ 11 $4 $3 $ 320,000 $ 50,000 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. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for year 1 and year 2 Year 1 Year 2 Unit product cost $ 39 $ b. Prepare an income statement for year 1 and year 2. Walsh Company Income Statement Year 1 Sales | $ 2,240,000 Variable expenses Variable cost of goods sold | 1,560,000 Variable selling and administrative 120,000 Year 2 2,800,000 $ 1,950,000 150,000 2,100,000 1,680,000 560,000 700,000 Total variable expenses Contribution margin Fixed expenses Fixed manufacturing overhead Fixed selling and administrative expense 320,000 50,000 320,000 50,000 Total fixed expenses Net operating income (loss) 370,000 190,000 370,000 330,000 $ $ 2. Assume the company uses absorption costing: a. Compute the unit product cost for year 1 and year 2. (Round your answer to 2 decimal places.) Year 1 47.00 S Unit product costs Year 2 84.40 b. Prepare an income statement for year 1 and year 2. (Round your Intermediate calculations to 2 decimal places.) Year 2 $ 2,800,000 Walsh Company Income Statement Year 1 Sales $ 2,240,000 Cost of goods sold 1,880,000 360,000 Selling and administrative expenses Net operating income (loss) $ 360,000 (1,420,000) $ (1,420,000) 3. Reconcile the difference between variable costing and absorption costing net operating income in year 1 and year 2. (Loss and deduction amounts should be indicated with a minus sign.) Year 1 Year 2 Variable costing net operating income (loss) Absorption costing net operating income (loss)