Randy Company has obtained the following data for the first year of operations:

Sales                                                 $2,868,750

Direct materials and labor                   $1,125,000

Variable manufacturing overhead         $431,250

Fixed manufacturing overhead             $656,250

Variable selling expenses                     $337,500

Fixed selling expenses                         $131,250

Units produced                                    125,000

Units sold                                            112,500

Units expected to be produced              125,000

A) Using variable costing, prepare an income statement for the first year of operations. Assume budgeted fixed costs were equal to actual fixed costs.

B) Using absorption costing, prepare an income statement for the first year of operations. Assume budgeted fixed costs were equal to actual costs.