\The following information pertains to Gabon Inc. for last year:
Beginning inventory in units ..........—
Units produced ............20,000
Units sold ................. 17,200
Costs per unit:
Direct materials ............$8.00
Direct labor ................$4.00
Variable overhead ............$1.50
Fixed overhead* ............$4.15
Variable selling expenses ..........$3.00
Fixed selling and administrative costs .....$24,300
* Fixed overhead totals $83,000 per year.
Assume that the selling price is $32 per unit.

Required:
1. Prepare an income statement using absorption costing.
2. Prepare an income statement using variable costing.