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2. Assume that the company uses variable costing. a Compute the unit product cost. (2 marks) b. Prepare an income statement for the year. (10 marks) Variable Costing Income Statement Sales Variable expenses: Variable cost of goods sold: Beginning inventory Add: Variable manufacturing costs Goods available for sale Less Ending inventory Variable cost of goods sold Variable selling expense Contribution margin | Fixed expenses Fixed manufacturing overhead Fixed selling and administrative Operating income BARBARELLA MALLISSA Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufactunng? Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs per year Fixed manufacturing overhead Fixed selling and administrative expense $25 12 3 5 200,000 110,000 During the year, the company produced 25,000 units and sold 21,000 units. The selling price of the company's product is $65 per unit. Required: 1. Assume that the company uses absorption costing. a. Compute the unit product cost. (5 marks) I . Prepare an income statement for the year (8 marks) Absorption Costing Income Statement Sales Cost of goods sold: Beginning inventory Add: Cost of goods manufactured Goods available for sale Less: Ending inventory Gross margin Selling and administrative expenses Operating income

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