As the chief financial analyst of a company, you have been asked by the chief executive to explain the differences between two income statements prepared for his consideration: one was prepared by the...

As the chief financial analyst of a company, you have been asked by the chief executive to explain the differences between two income statements prepared for his consideration: one was prepared by the controller and the other by the sales manager. Both used the same data from operations.

The only variable costs of production are `40 per unit.

(i) Determine which statement was prepared using variable costing and which using absorption costing. Explain how do you know it?

(ii) Determine: (a) fixed production costs; (b) selling and administrative costs; (c) production in units; and (d) cost per unit of inventory for both statements.