The following information pertains to Synergy Inc. for last year:

Assume that the selling price is $32 per unit.
Required:
1. Prepare an income statement using absorption costing.
2. Prepare an income statement using variable costing.

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Beginning inventory in units Units produced Units sold 20,000 17,200 Costs per unit: Direct materials $8.00 $4.00 Direct labour Variable overhead Fixed overhead* Variable selling expenses Fixed selling and administrative costs * Fixed overhead totals $83,000 per year. $1.50 $4.15 $3.00 $24,300