Information for Rafael Corp. is given in BE8-8. Suppose the accountant for Rafael Corp. uses normal costing and uses the budgeted volume of 50,000 units to allocate the fixed overhead rate rather than the actual production volume of 40,000 units. The company expenses production volume variance to cost of goods sold in the accounting period in which it occurs.

(a) Calculate the manufacturing cost per unit and prepare a normal-costing income statement for the first year of operation.

(b) Reconcile the difference in net income between the variable-costing and normal-costing methods.