Ace products sells its products for $22 each. Unit manufacturing cost are : direct material $4 direct manufacturing labour $6 and variable manufacturing overhead $3. Total fixed manufacturing overhead costs are $60,000 and marketing expenses are $2 per unit plus $20,000 per year. The current production level is 25,000 units although only 20,000 unit are anticipated tobe sold.

Compute an income statement using absorbtion costing and variable costing.