Only part 2 and 3 is required.

Security Technology Inc. (STI) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police and military applications. The part sells for $42 per unit and had sales of 24,650 units in the current year, 2018. STI has no inventory on hand at the beginning of 2018 and is projecting sales of 27,950 units in 2019. STI is planning the same production level for 2019 as in 2018, 26,300 units. The variable manufacturing costs for STI are $13, and the variable selling costs are only $0.40 per unit. The fixed manufacturing costs are $184,100 per year, and the fixed selling costs are $630 per year. Required: 1. Prepare an income statement for each year using full costing. 2. Prepare an income statement for each year using variable costing. 3. Prepare a reconciliation of the difference each year in the operating income resulting from the full and variable costing methods.

Required 1 Required 2 Required 3 Prepare an income statement for each year using variable costing. (Round your final answers to nearest whole dollar a SECURITY TECHNOLOGY INC. Variable Costing Income Statement 2018 $ 2019 $ 1.035.300 1,173,900 Sales Less: Cost of goods sold Beginning inventory Cost of goods produced s o 341,900 341,900 341,900 Available for sale Less: Ending inventory Cost of goods sold Add: Variable selling and administrative 9.860 11.180 Contribution margin Less: Fixed manufacturing costs 184.100 184,100 Less: Selling and administrative costs Fixed 630 630 Operating income Required 1 Required 2 Required 3 Prepare a reconciliation of the difference each year in the operating income resulting from the full and variable costing methods. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your "Fixed overhead rate" answers to 2 decimal places, and other final answers to nearest whole dollar amount.) SECURITY TECHNOLOGY INC. Reconciling Difference in Operating Income Between Full and Variable Costing 2018 2019 Change in inventory in units Multiply times fixed overhead rate Difference in operating income $ 0 $ 0 Required 1 Required 2 Required 3 Prepare an income statement for each year using full costing. (Round your final answers to nearest whole dollar amount.) SECURITY TECHNOLOGY INC. Full Costing Income Statement 2018 $ 1,035,300 2019 rs 1,173.900 Sales Less: Cost of goods sold | Cost of goods produced Beginning inventory is 526,000 $ 526.000 33,000 559,000 Available for sale | Less: Ending inventory 526,000| 33,000 Cost of goods sold Gross margin Less: Selling and administrative costs 493,000 542,300 550.000 614,900 $ S Fixed 630 9,860 6301 11,1801 | Variable 11,810 10.490|| 531.810 Operating income S S 603,090