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Fletcher Company manufactures and sells one product. The following information pertains to each of the companys first two years of operations:

Variable costs per unit:
Manufacturing:
Direct materials		$ 25
Direct labor		$ 15
Variable manufacturing overhead		$ 2
Variable selling and administrative		$ 1
Fixed costs per year:
Fixed manufacturing overhead	$	320,000
Fixed selling and administrative expenses	$	100,000

During its first year of operations, Fletcher produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the companys product is $53 per unit.

1.	Assume the company uses variable costing:

a.	Compute the unit product cost for year 1 and year 2. (Omit the "$" sign in your response.)

	Year 1	Year 2
Unit product cost	$	$

b.	Prepare an income statement for year 1 and year 2. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

	Year 1	Year 2
(Click to select)Fixed manufacturing overheadVariable selling and administrative expensesVariable cost of goods soldContribution marginSalesFixed selling and administrative expensesNet operating income (loss)	$	$
Variable expenses:
(Click to select)Net operating income (loss)Fixed selling and administrative expensesVariable cost of goods soldSales commissionsSalesContribution marginFixed manufacturing overhead
(Click to select)Fixed selling and administrative expensesVariable selling and administrative expensesContribution marginSalesSales commissionsFixed manufacturing overheadNet operating income (loss)
Total variable expenses
(Click to select)Variable selling and administrative expensesFixed manufacturing overheadSalesNet operating income (loss)Contribution marginVariable cost of goods soldFixed selling and administrative expenses
Fixed expenses:
(Click to select)Fixed manufacturing overheadSalesSales commissionsVariable selling and administrative expensesContribution marginNet operating income (loss)Variable cost of goods sold
(Click to select)Sales commissionsVariable selling and administrative expensesVariable cost of goods soldContribution marginFixed selling and administrative expensesSalesNet operating income (loss)
Total fixed expenses
(Click to select)Contribution marginVariable selling and administrative expensesSalesNet operating income (loss)Fixed selling and administrative expensesVariable cost of goods soldFixed manufacturing overhead	$	$

2.	Assume the company uses absorption costing:

a.	Compute the unit product cost for year 1 and year 2. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

	Year 1	Year 2
Unit product cost	$	$

b.	Prepare an income statement for year 1 and year 2. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

	Year 1	Year 2
(Click to select)Selling and administrative expensesGross marginNet operating income (loss)Cost of goods soldSales	$	$
(Click to select)Gross marginSelling and administrative expensesCost of goods soldSalesNet operating income (loss)
(Click to select)Net operating income (loss)Selling and administrative expensesSalesGross marginCost of goods sold
(Click to select)Gross marginNet operating income (loss)Selling and administrative expensesCost of goods soldSales
(Click to select)SalesGross marginNet operating income (loss)Selling and administrative expensesCost of goods sold	$	$

3.	Reconcile the difference between variable costing and absorption costing net operating income in year 1 and year 2. (Input Income and anything that you add as positive numbers. Input losses and anything that you deduct as negative. Omit the "$" sign in your response.)

	Year 1	Year 2
Variable costing net operating income (loss)	$	$
(Click to select)AddDeduct: (Click to select)Fixed manufacturing overhead cost deferred in inventory under absorption costingFixed manufacturing overhead cost released from inventory under absorption costing
(Click to select)AddDeduct: (Click to select)Fixed manufacturing overhead cost deferred in inventory under absorption costingFixed manufacturing overhead cost released from inventory under absorption costing
Absorption costing net operating income	$	$

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