Variable and Absorption Costing

Scott Manufacturing makes only one product with total unit manufacturing costs of $$59,$ of which $$41$ is variable.

No units were on hand at the beginning of Year $1.$ During Year $1$ and Year $2,$ the only product manufactured was

sold for $$93$ per unit, and the cost structure did not change. Scott uses the first$-$in$,$ first$-$out inventory method and

has the following production and sales for Year $1$ and Year $2$

a$.$ Prepare gross profit computations for Year $1$ and Year $2$ using absorption costing.

Do not use negative signs with your answers.

b$.$ Prepare gross profit computations for Year $1$ and Year $2$ using variable costing.

Do not use negative signs with your answers.

c$.$ Explain how your answers illustrate the impact of differences between production and sales volumes on the