Fine Gadgets produces WiFi-enabled wrist watches. The following data is available for 2018:

Units
Beginning inventory....................................................0
Production.............................................................5,000
Sales.......................................................................4,500
Costs
Variable manufacturing costs per unit:
Direct materials......................................................$ 40
Direct labour..............................................................10
Variable manufacturing overhead............................6
Variable marketing costs per unit.............................4
Fixed manufacturing overhead........................60,000
Fixed marketing and administrative costs......40,000
Sales price per unit...................................................85

Required:

1. Prepare in good form variable and absorption costing income statements for 2018.

2. Prepare a schedule reconciling the net incomes for 2018 under the two methods.