Ogilvy Company manufactures and sells one product. The followinginformation pertains to each of the company’s first three years ofoperations:

Variable cost per unit:
Direct materials	$	35
Fixed costs per year:
Direct labor	$	2,212,000
Fixed manufacturing overhead	$	841,000
Fixed selling and administrative expenses	$	320,000

The company does not incur any variable manufacturing overheadcosts or variable selling and administrative expenses. During itsfirst year of operations, Ogilvy produced 79,000 units and sold79,000 units. During its second year of operations, it produced79,000 units and sold 73,400 units. In its third year, Ogilvyproduced 79,000 units and sold 84,600 units. The selling price ofthe company’s product is $78 per unit.

Required:

1. Assume the company uses super-variable costing:

a. Compute the unit product cost for Year 1, Year 2, and Year3.

b. Prepare an income statement for Year 1, Year 2, and Year3.

2. Assume the company uses a variable costing system thatassigns $28 of direct labor cost to each unit produced:

a. Compute the unit product cost for Year 1, Year 2, and Year3.

b. Prepare an income statement for Year 1, Year 2, and Year3.

3. Reconcile the difference between the super-variable costingand variable costing net operating incomes in Years 1, 2, and3.