The Plymouth Company differs from the New York Company (described in Problem 13-56 ) in only one respect: It has both variable and fixed manufacturing costs. Its variable costs are $.14 per gallon, and its fixed manufacturing costs are $510,000 per year.

1. Using the same data as in the preceding problem, except for the change in production-cost behavior, prepare three-column income statements for 20X0, for 20X1, and for the 2 years together using (a) variable costing and (b) absorption costing.

2. What inventory costs would be carried on the balance sheets on December 31, 20X0 and 20X1, under each method?