Ireland Corporation planned to be in operation for three years

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Ireland Corporation planned to be in operation for three years.

• • During the first year, 2011, it had no sales but incurred $240,000 in variable manufacturing e1penses and $80,000 in fi1ed manufacturing e1penses.
  • In 2012, it sold half of the finished goods inventory from 2011 for $200,000 but it had no manufacturing costs.
  • In 2013, it sold the remainder of the inventory for $240,000, had no manufacturing e1penses and went out of business.
  • Marketing and administrative e1penses were fi1ed and totaled $40,000 each year.

Required:

1. Prepare an income statement for each year using absorption costing.
2. Prepare an income statement for each year using variable costing.