Part B: Absorption and Variable Costing Income Statement [10 Marks Billy Ltd produces and sells wooden pallets that are used for moving and stacking materials. The operating costs for the past year were as follows: During the year, Billy produced 200 000 wooden pallets and sold 204 300 at $9 each. Billy had 8200 pallets in beginning finished goods inventory; costs have not changed from last year to this year. An actual costing system is used for product costing Variable costs per unit: Direct materials $2.85 Direct labour $1.92 Variable overhead $1.60 Variable selling $0.90 Fixed costs per year: Fixed Overhead $180 000 Selling and administrative $ 96000 Required: A. What is the per-unit inventory cost that is acceptable for reporting on Billy balance sheet at the end of the year? How many units are in ending inventory? What is the total cost of ending inventory? 12 Marks B. Prepare absorption-costing income statement. 12 Marks C. What would the per-unit inventory cost be under variable costing? Does this differ from the unit cost computed in requirement 1? Why? [2 Marks) D. Prepare variable-costing income statement [2 Marks E. Suppose that Billy Ltd had sold 196 700 pallets during the year. What would absorption-costing operating income have been? Variable-costing operating income? 12 Marks