Widgits-R-Us specializes in building gears that go into large windmills and clocks. The company has had the following sales and production costs for the last four years.

Required:
1. Compute operating incomes using variable and absorption costing and FIFO periodic inventory flows.
2. Compute operating incomes using variable and absorption costing and LIFO periodic inventory flows.
3. Reconcile the change in operating income over the four years using variable vs. absorptioncosting.

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2009 2009 2010 2011 2012 10,000 11,000 $14 $5 Production units Sales units Sales price per unit Variable production costs per unit. Fixed production costs. Variable selling costs per unit. Fixed selling costs. 6,000 5,000 S14 8,000 10,000 S14 $5 $20,000 $3 8,000 S14 $5 $20,000 $3 S16,000 $5 $20,000 $20,000 S3 $16,000 $3 S16,000 $16,000