Marotta Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2010, the first year of operations, Marotta produced 4,000 tons of plastic and sold 3,000 tons. In 2011, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,000, variable manufacturing costs were 15% of the sales price of units produced, variable selling expenses were 10% of the selling price of units sold, fixed manufacturing costs were $2,400,000, and fixed administrative expenses were $600,000.
1. Complete the income statements for each year using variable costing. (List amounts from largest to smallest e.g. 10, 5, 3, 2. If answer is zero, please enter 0. Do not leave any fields blank. Enter all amounts as positive amounts and subtract where necessary.)
2. Complete the income statements for each year using absorption costing. (List amounts from largest to smallest e.g. 10, 5, 3, 2. If the amounts are the same, list alphabetically. If answer is zero, please enter 0. Do not leave any fields blank. Enter all amounts as positive amounts and subtract where necessary.)
3. Reconcile the differences each year in net income under the two costing approaches. (If amount decreases the income, use either a negative sign preceding the number eg -45 or parentheses eg (45).)