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.

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 S Current Year $ 5.400 6,600 Sales 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 > 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 S 5,400 6,600 Sales Less: Cost of goods sold Available for sale Cost of goods sold Contribution margin Less: Selling and administrative costs Operating income 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 Current Year Change in inventory in units x fixed overhead rate Difference in operating income $ S 0 0