Walsh 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	$ 21
Direct labor	$ 18
Variable manufacturing overhead	$ 2
Variable selling and administrative	$ 1
Fixed costs per year:
Fixed manufacturing overhead	$ 320,000
Fixed selling and administrative expenses	$ 90,000

During its first year of operations, Walsh 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 $51 per unit.

Required:

1. Assume the company uses variable costing:

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

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

2. Assume the company uses absorption costing:

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

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

3. Reconcile the difference between variable costing and absorption costing net operating income in Year 1.

Walsh Company Income Statement Year 1 Year 2 Sales $ 2,040,000 Variable expenses: Variable cost of goods sold Variable selling and administrative 164,000 40,000 50,000 Text Cash Accounts receivable 320,000 Total variable expenses Contribution margin 524,000 1,516,000 50,000 (50,000) Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expense 0 0 Net operating income (loss) $ 1,516,000 $ (50,000) X Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 3 Assume the company uses absorption costing. Compute the unit product cost for Year 1 and Year 2. (Round your answer to 2 decimal places.) Year 1 Year 2 Unit product cost $ 44.55 44.55 X