2. Below is operating information of Weber Light Aircraft, acompany that produces light recreational aircraft.
| Per Aircraft | Per Month |
Selling price | $100,000 | |
Direct materials | $19,000 | |
Direct labor | $5,000 | |
Variable manufacturing overhead | $1,000 | |
Fixed manufacturing overhead | | $70,000 |
Variable selling and administrative expense | $10,000 | |
Fixed selling and administrative expense | | $20,000 |
| January | February | March |
Beginning inventory | 0 | 1 | 0 |
Units produced | 2 | 2 | 5 |
Units sold | 1 | 3 | 5 |
Ending inventory | 1 | 0 | 0 |
a. Compute the unit product cost using variable costingmethod.
b. Prepare an income statement for January, February and Marchusing variable costing method.
c. Compute the unit product cost using absorption costingmethod.
d. Prepare an income statement for January, February and Marchusing absorption costing method
e. Explain why both variable and absorption costing generatesame income in a particular month, whereas in another month theygenerate different incomes.
