Brindle Arts uses Variable Costing for internal purposes, but uses Absorption Costing for their financial reports. The following information is for Quarter 2 and Quarter 3 of 2020. Calculate unit product costs for Quarters 2 & 3 for Variable and Absorption Costing, prepare an income statement for each method, then show why there is a difference between the two. Selling price per unit Units in beginning inventory Production (in units) Sales (in units) Ending inventory Fixed manufacturing overhead Fixed selling & administrative Sales Variable expenses: Variable COGS Variable S&A $ Fixed Costs in total Total variable expenses Contribution Margin 200 Quarter 2 Fixed expenses: Fixed MOH Fixed S&A Total fixed expenses Net Operating Income 15,000 12,000 3,000 Variable Costing Compute the unit product costs for Quarters 2 & 3 Quarter 2 Quarter 3 Variable unit product cost Prepare an income statement for Quarters 2 & 3 Quarter 3 3,000 7,500 10,500 $350,000 $200,000 Quarter 2 Quarter 3 Variable costs per unit $ $ Direct materials Direct labor Variable overhead Variable S&A Units in beginning inventory + units produced - units sold = units in ending inventory FOH costs in ending inventory - FOH in beg. inv. = FOH deferred in inventory or (released from inventory) SSS Variable NOI Add: FOH deferred in inv. Less: FOH released from inv. Absorption costing NOI $ Show the difference between variable costing NOI and absorption costing NOI. $ 65.00 30.00 15.00 10.00 Quarter 2 Select one Quarter 3 Select one **Hint: be careful of signs