Below is an excerpt from the financial data from JasNav Inc. The company has adopted a standard costing system. The following data are for the year ended December 31, 20x3: Inventory, Jan 1, 20x3 - 100,000 units.

Inventory, Dec 31, 20x3 - 35,000 units

Sales - 350,000 units

Selling price - $35.00

Variable manufacturing costs - 7.00

Variable selling costs - 1.50

Fixed manufacturing overhead - $1,710,000

Denominator-level direct labour hours - 7,500

Standard production rate - 40 units per direct labor hour

Fixed operating expenses - $1,000,000

Required

Prepare income statements under variable and absorption costing for the year ended December 31, 20x3, and reconcile the two incomes. Assume that the budget costs were the same as the actual costs incurred.