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Security Technology Incorporated (STI) is a manufacturer of an electronic control system used in the manufacture of certain special- duty auto transmissions used primarily for police and military applications. The part sells for $58 per unit and STI had sales of 24,150 units in the current year, 2021. STI had no inventory on hand at the beginning of 2021 and is projecting sales of 26,450 units in 2022. STI is planning the same production level for 2022 as in 2021, 25,300 units. The variable manufacturing costs for STI are $19, and the variable selling costs are only $0.80 per unit. The fixed manufacturing costs are $177,100 per year, and the fixed selling costs are $530 per year. Required: 1. Prepare an income statement for each year using full costing. 2. Prepare an income statement for each year using variable costing. 3. Prepare a reconciliation of the difference each year in the operating income resulting from the full and variable costing methods. Required 1 Required 2 Required 3 Prepare an income statement for each year using full costing. (Round your final answers to nearest whole dollar amount.) SECURITY TECHNOLOGY INCORPORATED Full Costing Income Statement 2021 2022 Sales Less: Cost of goods sold Beginning inventory Cost of goods produced Available for sale Less: Ending inventory Cost of goods sold Gross margin Less: Selling and administrative costs Operating income Required 1 Required 2 Required 3 Prepare an income statement for each year using variable costing. (Round your final answers to nearest whole dollar amount.) SECURITY TECHNOLOGY INCORPORATED Variable Costing Income Statement 2021 2022 Less: Cost of goods sold Available for sale Cost of goods sold Contribution margin Less: Selling and administrative costs Operating income Required 1 Required 2 Required 3 Prepare a reconciliation of the difference each year in the operating income resulting from the full and variable costing methods. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your "Fixed overhead rate" answers to 2 decimal places, and other final answers to nearest whole dollar amount.) 2022 SECURITY TECHNOLOGY INCORPORATED Reconciling Difference in Operating Income Between Full and Variable Costing 2021 Change in inventory in units Multiply times fixed overhead rate Difference in operating income $ 0 $ 0

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