Rey Company's single product sells at a price of $234 per unit. Data for its single product for its first year of operations follow.
| Direct materials |
$ |
38 |
per unit |
| Direct labor |
$ |
46 |
per unit |
| Overhead costs |
|
|
|
| Variable overhead |
$ |
6 |
per unit |
| Fixed overhead per year |
$ |
196,000 |
per year |
| Selling and administrative expenses |
|
|
|
| Variable |
$ |
36 |
per unit |
| Fixed |
$ |
236,000 |
per year |
| Units produced and sold |
|
24,500 |
units |
1. Prepare an income statement for the year using absorption costing
2. Prepare an income statement for the year using variable costing.