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		Current Year
Sales (000s)	1,800	units	2,200	units
Production (000s)	2,000	units	2,000	units
Production cost
Factoryvariable (per unit)	$ 0.60		$ 0.60
fixed (000s)	$ 1,000		$ 1,000
Marketingvariable (per unit)	$ 0.40		$ 0.40
Administrativefixed (000s)	$ 500		$ 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.

Complete this question by entering your answers in the tabs below. 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 Sales Less: Cost of goods sold Variable Fixed Beginning inventory 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