I need help with preparing income statement for 2016 & 2017 variable costing Income statement for Absorption for 2016 & 2017 using the illustration below format provided. Then I need to have it reconciled and comment on the effect of production.

*P6-7AJackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2016, the first year of operations, Jackson produced 4,000 tons of plastic and sold 3,500 tons. In 2017, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,000, variable manufacturing costs were 15% of the sales price of units produced, variable selling expenses were 10% of the selling price of units sold, fixed manufacturing costs were $2,800,000, and fixed administrative expenses were $500,000.

Instructions

• Prepare income statements for each year using variable costing. (Use the format fromIllustration 6A.5.) (a) 2017 $2,700,000
• Prepare income statements for each year using absorption costing. (Use the format fromIllustration 6A.4.) (b) 2017 $2,350,000
• Reconcile the differences each year in net income under the two costing approaches.
• Comment on the effects of production and sales on net income under the two costing approaches.

Prepare absorption and variable costing income statements and reconcile differences between absorption and variable costing income statements when sales level and production level change. Discuss relative usefulness of absorption costing versus variable costing.

PREMIUM PRODUCTS CORPORATION Income Statement For the Month Ended January 31, 2017 Variable Costing
Sales (20,000 units $20)	$400,000
Variable cost of goods sold
Inventory, January 1	$0
Variable cost of goods manufactured (30,000 units $9)	270,000
Variable cost of goods available for sale	270,000
Less: Inventory, January 31 (10,000 units $9)	90,000
Variable cost of goods sold	180,000
Variable selling and administrative expenses (20,000 units $2)	40,000	220,000
Contribution margin	180,000
Fixed manufacturing overhead	120,000
Fixed selling and administrative expenses	15,000	135,000
Net income	$45,000