Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in the prior year. These data summarize the current and prior year operations: Prior Year 2,700 units 3,800 units Current Year 4,900 units 3,800 units Sales (000s) Production (2005) Production cost Factory-variable (per unit) -fixed (000s) Marketing-variable (per unit) Administrative-fixed (000s) $ 0.60 $ 1,900 $ 0.40 $ 500 $ 0.60 $ 1,900 $ 0.40 $ 500 Required: 1. Prepare an income statement for each year based on full costing. 2. Prepare an income statement for each year based on variable costing. 3. Prepare a reconciliation of the difference each year in the operating income resulting from using the full costing method and variable costing method. Required 1 Required 2 Required 3 Prepare an income statement for each year based on full costing. (Enter your answers in thousands of dollars.) YALE COMPANY Full Costing Income Statement Prior Year Current Year Less: Cost of goods sold Available for sale Cost of goods sold Gross margin Less: Selling and administrative costs Operating income Required 1 Required 2 Required 3 Prepare an income statement for each year based on variable costing. (Enter your answers in thousands of dollars.) YALE COMPANY Variable Costing Income Statement Prior Year Current Year Less: Cost of goods sold Available for sale Cost of goods sold Contribution margin Less: Selling and administrative costs Operating income Required 1 Required 2 Required 3 Prepare a reconciliation of the difference each year in the operating income resulting from using the full costing method and variable costing method. (Negative amounts should be indicated by a minus sign. Round your "Fixed overhead rate" answers to 2 decimal places. Enter your answers in thousands of dollars.) YALE COMPANY Reconciling Difference in Operating Income Between Full and Variable Costing Prior Year Change in inventory in units x fixed overhead rate Difference in operating income Current Year