Security Technology Inc. (STI) is a manufacturer of anelectronic control system used in the manufacture of certainspecial-duty auto transmissions used primarily for police andmilitary applications. The part sells for $57 per unit and hadsales of 24,100 units in the current year, 2018. STI has noinventory on hand at the beginning of 2018 and is projecting salesof 26,300 units in 2019. STI is planning the same production levelfor 2019 as in 2018, 25,200 units. The variable manufacturing costsfor STI are $18, and the variable selling costs are only $0.70 perunit. The fixed manufacturing costs are $201,600 per year, and thefixed selling costs are $520 per year. Required: 1. Prepare anincome statement for each year using full costing. 2. Prepare anincome statement for each year using variable costing. 3. Prepare areconciliation of the difference each year in the operating incomeresulting from the full and variable costing methods.
