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		3,400	units		7,000	units
Production		5,200	units		5,200	units
Production cost
Factoryvariable (per unit)	$	0.60		$	0.60
fixed	$	2,600		$	2,600
Marketingvariable	$	0.40		$	0.40
Administrativefixed	$	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.

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