Wentzel Company manufactures and sells one product. The following information pertains to each of the companys first two years of operations:

Variable costs per unit: direct materials are $15, direct labor is $10, variable manufacturing overhead is $7, and variable selling and administrative costs are $1.

Fixed costs per year: fixed manufacturing overhead is $525,000 and fixed selling and administrative costs are $110,000.

During its first year of operations, Wentzel produced 75,000 units and sold 60,000 units. During its second year of operations, it produced 60,000 units and sold 75,000 units. The selling price of the companys product is $58 per unit.

Required:

1. Assume that 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 that 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.