Expert Answer :Adams Company, a manufacturer of in-home decorativ

Solved by verified expert :Adams Company, a manufacturer of in-home decorative fountains, began operations on September 1 of the current year. Its cost and sales information for this year follows.Production costsDirect materials . . . . . . . . . . . . . . . . . . . . $40 per unitDirect labor . . . . . . . . . . . . . . . . . . . . . . .$60 per unitOverhead costs for the yearVariable overhead . . . . . . . . . . . . . . . . . $3,000,000Fixed overhead . . . . . . . . . . . . . . . . . . . $7,000,000Nonproduction costs for the yearVariable selling and administrative . . . . . . . $ 770,000Fixed selling and administrative . . . . . . . . . $4,250,000Production and sales for the yearUnits produced . . . . . . . . . . . . . . . . . . . . . 100,000 unitsUnits sold . . . . . . . . . . . . . . . . . . . . . . . . 70,000 unitsSales price per unit . . . . . . . . . . . . . . . . . . $350 per unit1. Prepare an income statement for the company using absorption costing.2. Prepare an income statement for the company using variable costing.3. Under what circumstance(s) is reported income identical under both absorption costing and variable costing?