XYZ Company has the following financial information:

To Do:

1. Calculate the value of the Ending Inventory under Absorption Costing and Variable costing for the prior year and current year.

2. Prepare an income statement under Absorption Costing for the current year

3. Reconcile the difference in Operating Income between Variable costing and Absorption Costing for the current year

4. Reconcile the difference in Ending Inventory between Variable costing and Absorption Costing for the current year

Current Year ? # Units in Beginning Inventory #Units Sold #Units Manufactured (Actual) #Units Manufactured (Budget) Selling Price (per unit) Variable Manufacturing Costs (per unit) Variable Sales+Admin Costs (per unit) Fixed Manufacturing Costs (Budget and Actual) (total) Fixed sales+admin costs (actual) (total) Net income (Variable Costing) Inventory is recorded at FIFO 570,000 610,000 640,000 10.00 5.00 1.00 1,600,000 360,000 322,000 Prior Year 0 580,000 590,000 600,000 9.90 4.80 1.00 1,560,000 350,000 468,000