Problem 3: Variable Costing and Absorption Costing (40 points) Brady Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: Variable costs per unit Manufacturing Direct materials $ 21 Direct labor $ 17 Variable manufacturing overhead $6 Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead $ 240,000 Fored selling and administrative expenses $ 80,000 During its first year of operations, Brady produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $59 per 55 unit Requirement 1: Assume the company uses VARIABLE COSTING a. Compute the unit product cost for Year 1 and Year 2 b. Prepare an income statement for Year 1 and Year 2 Requirement 2: Assume the company uses ABSORPTION COSTING: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2 **Use the answer sheet on the next page.**