Prepare a variable costing income statement for each year.

Refer to the absorption costing income statements above.

Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how much is fixed.

Reconcile the variable costing and absorption costing net operating income figures for each year.

Refer again to the absorption costing income statements. Explain why net operating income was higher in Year $2$ than it was in Year $1$ under the absorption approach, in light of the fact that fewer units were sold in Year $2$ than in Year $1.$

Refer again to the absorption costing income statements. Explain why the company suffered a loss in Year $3$ but reported a profit in Year $1$ although the same number of units was sold in each year.

Explain how operations would have differed in Year $2$ and Year $3$ if the company had been using Lean Production, with the result that ending inventory was zero.

If Lean Production had been used during Year $2$ and Year $3,$ what would the company$$s net operating income $($or loss$)$ have been in each year under absorption costing? No computations are necessary.