Scott Manufacturing makes only one product with total unit manufacturing costs of $54, of which $36 is variable

Scott Manufacturing makes only one product with total unit manufacturing costs of $54, of which $36 is variable. No units were on hand at the beginning of 2015. During 2015 and 2016, the only product manufactured was sold for $84 per unit, and the cost structure did not change. Scott uses the first-in, first-out inventory method and has the following production and sales for 2015 and 2016: 
Units Units Sold 
Manufactured 
2015 120,000 90,000 
2016 120,000 130,000 
a. Prepare gross profit computations for 2015 and 2016 using absorption costing. Do not use negative signs with your answers. 
Absorption Costing 2015 
2016 
Sales Cost of goods sold: Beginning inventory Production 
Goods available 
Less: Ending inventory Cost of goods sold Gross profit 
sc 
b. Prepare gross profit computations for 2015 and 2016 using variable costing. Do not use negative signs with your answers. 
Variable Costing 
2015 2016 
Sales S $ Variable cost of goods sold: Beginning inventory 
Production Goods available Less: Ending inventory Variable cost of goods sold Less: Fixed manufacturing costs Gross profit 
c. Explain how your answers illustrate the impact of differences between production and sales volumes on the gross profits reported each year under absorption and variable costing. Select the most appropriate statement. 
O If production volume exceeds sales volume, the absorption costing gross profit will be higher than the variable costing gross profit. O If sales volume exceeds production volume, the absorption costing gross profit will be higher than the variable costing gross profit. O If production volume exceeds sales volume, the variable costing gross profit will be higher than the absorption costing gross profit. O If sales volume exceeds production volume, the variable costing gross profit will be lower than the absorption costing gross profit.