Stuart Manufacturing pays its production managers a bonus based on the company's profitability. During the two most recent years, the company, maintained the same cost structure to manufacture its products. Year Units Produced Units Sold Production and Sales Year 2 4,000 4, 000 Year 3 6,000 4,000 Cost Data Direct materials $ 14.00 per unit Direct labor $ 23 .10 per unit Manufacturing overhead-variable $ 11. 10 per unit Manufacturing overhead-fixed $ 107, 400 Variable selling and administrative expenses $ 7. 10 per unit sold Fixed selling and administrative expenses $ 58,000 (Assume that selling and administrative expenses are associated with goods sold.) Stuart sells its products for $109.00 per unit. Required a. Prepare income statements based on absorption costing for Year 2 and Year 3. b. Since Stuart sold the same number of units in Year 2 and Year 3, why did net income increase in Year 3.saved Help Required a. Prepare income statements based on absorption costing for Year 2 and Year 3. b. Since Stuart sold the same number of units in Year 2 and Year 3, why did net income increase in Year 3. d. Determine the costs of ending inventory for Year 3. e. Prepare income statements based on variable costing for Year 2 and Year 3.Req A Year 2 Req A Year 3 Req B Reg D Req E Year 2 Req E Year 3 Prepare income statements based on absorption costing for Year 2. Note: Do not round intermediate calculations. STUART MANUFACTURING Absorption Costing Income Statement For the Year Ended December 31, Year 2 Revenues Cost of Goods Sold: Direct labor Direct materials Manufacturing overhead O O Gross margin Selling and administrative expenses Net income 0Req A Year 2 : Req A Year 3 Reg B Reg D Req E Year 2 Req E Year 3 Prepare income statements based on absorption costing for Year 3. Note: Do not round intermediate calculations. STUART MANUFACTURING Absorption Costing Income Statement For the Year Ended Dec. 31, Year 3 Revenues Cost of Goods Sold: es Direct labor Direct materials Manufacturing overhead O Gross margin O Selling and administrative expenses Net income 0U. WEICIIIIIIIS THIS LUSLO VI CHUBBY IIIVCHILIy IVI ICUI J. e. Prepare income statements based on variable costing for Year 2 and Year 3. Complete this question by entering your answers in the tabs below. Req A Year 2 Req A Year 3 Req B Req D Req E Year 2 Req E Year 3 Determine the costs of ending inventory for Year 3. Note: Do not round intermediate calculations. Ending inventory Req A Year 2 Req A Year 3 Req B Req D Req E Year 2 | Req E Year 3 Prepare income statements based on variable costing for Year 2. Note: Do not round intermediate calculations. STUART MANUFACTURING Variable Costing Income Statement For the Year Ended December 31, Year 2 Revenues Variable costs: Direct labor ces Direct materials Variable manufacturing overhead Variable selling and administrative expenses Contribution margin O Fixed manufacturing overhead Fixed selling and administrative expenses Net income 0Req A Year 2 Req A Year 3 Req B Req D Req E Year 2 Req E Year 3 Prepare income statements based on variable costing for Year 3. Note: Do not round intermediate calculations. STUART MANUFACTURING Variable Costing Income Statement For the Year Ended Dec. 31, Year 3 Revenues Variable costs: Direct labor Direct materials Variable manufacturing overhead Variable selling and administrative expenses Contribution margin 0 Fixed manufacturing overhead Fixed selling and administrative expenses Net income 0