Chapter 19, Problem 7AP

(a)

To determine

Prepare the variable costing income statement for each year.

(b)

To determine

Prepare the absorption costing income statement for each year.

(c)

To determine

Compute the reconciliation of each year net income under the two costing approaches.

(d).

To determine

Explain the effects of production and sales on net income under the two costing approaches.