Degrees, Inc., a manufacturer of frozen food, began operations on July 1 of the current year. During this time, the company produced 140,000 units and sold 140,000 units at a sales price of $125 per unit. Cost information for this period is shown below.

(a) Prepare 32 Degree's December 31st income statement for the current year under absorption costing.

(b) Prepare 32 Degree's December 31st income statement for the current year under variable costing.

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Production costs Direct materials Direct labor Variable overhead Fixed overhead Non-production costs Variable selling and administrative Fixed selling and administrative $13.00 per unit $6.00 per unit $2,100,000 in total $3,220,000 in total $91,000 in total $458,000 in total