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Varilux manufactures

Varilux manufactures a single product and sells it for $10 per unit. At the beginning of the year there were l000 units in inventory. Upon further investigation you discover that units produced last year had $3 of fixed manufacturing costs and $2 variable manufacturing costs. During the year Varilux produced 10,000 units of the product. Each unit produced incurred $3 variable manufacturing cost. Total fixed manufacturing cost for the year was $40,000. Selling and administrative costs consisted of $12,000 variable cost and $18000 of fixed costs. There were no inventories at the end of the year.Prepare two income statements on the current year; one on a variable cost basis and the second on an absorption cost basis. Explain any difference in the reports and provide calculations supporting your explanation.

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