The following data relate to Strong Company Limited for three years:

You are required to prepare income statements for three years individually and collectively under absorption costing and variable costing methods, assuming that actual costs are in conformity with budgeted costs. You are also required to account for difference, if any, in the result report under the two methods.

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Units produced Units sold Unit selling price Unit variable manufacturing cost Unit variable selling and administrative cost Total fixed manufacturing cost Total fixed selling and administrative expenses Normal capacity (units) Inventory at the beginning of year 1 Year 1 Year 2 Year 3 1,00,000 80,000 60,000 90,000 70,000 1,00,000 75 75 5 2 2 2 0.50 0.50 0.50 1,00,000 50,000 1,00,000 Nil