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Problem 4. Variable and Absorption Costing Unit Product Costs and Income Statements;
Explanation of Difference in Net Operating Income Borunda Corporation has provided the
following data for its two most recent years of operation: Required: a. Assume the company uses
absorption costing. Prepare an income statement for each year. b. Assume the company uses
variable costing. Prepare an income statement for each year. c. Prepare a report in good form
reconciling the variable costing and absorption costing net incomes.

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