Rey Company’s single product sells at a price of $216 per unit. Data for its single product for its first year of operations follow.
| Direct materials | $ | 20 | per unit |
| Direct labor | $ | 28 | per unit |
| Overhead costs | |||
| Variable overhead | $ | 6 | per unit |
| Fixed overhead per year | $ | 160,000 | per year |
| Selling and administrative expenses | |||
| Variable | $ | 18 | per unit |
| Fixed | $ | 200,000 | per year |
| Units produced and sold | 20,000 | units | |
1. Prepare an income statement for the year using absorption costing
2. Prepare an income statement for the year using variable costing.
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