Sims Company, a manufacturer of tablet computers, began operations on January I. 2015. Its cost and sales information for this year follows absorption

Manufacturing costs

Direct materials.....................................$40 per unit

Direct labor..........................................$60 per unit

Overhead costs for the year

Variable overhead..................................$3,000,000

Fixed overhead.....................................$7,000,000

Selling and administrative costs for the year

Variable...............................................$ 770,000

Fixed................................................$4,250,000

Production and sales for the year

Units produced.................................100,000 units

Units sold..........................................70,000 units

1. Prepare an income statement for the year using variable costing.

2. Prepare an income statement for the year using absorption costing.

3. Under what circumstance(s) is reported income identical under both absorption costing and variable costing?