Required:

Prepare a variable costing income statement for each year.

Refer to the absorption costing income statements above.

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

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

$5$b$.$ 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?