Sivan Co. manufactures and sells one product. For the year, they started with no opening inventory; produced

100,000 units but only sold 70,000 units. The selling price per each unit is $80.

The variable costs per unit were:

Direct materials…………………….7

Direct Labor ………………………..6

variable manufacturing overhead….5

variable selling and administrative….6

Fixed costs per year:

Fixed manufacturing Overhead …………….$700,000

Fixed Selling and Administrative expenses….$300,000

(a) Prepare the Income Statement using Absorption Costing.

(b) Prepare the Income Statement using Variable Costing

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