Reference no: EM132627309

Easton Pump Company's planned production for the year just ended was 18,700 units. This production level was achieved, and 21,000 units were sold. Other data follow:

Direct material used$557,260

Direct labor incurred 269,280

Fixed manufacturing overhead 407,660

Variable manufacturing overhead 188,870

Fixed selling and administrative expenses 316,030

Variable selling and administrative expenses 100,045

Finished-goods inventory, January 1 2, 900 units

The cost per unit remained the same in the current year as in the previous year. There were no work-in-process inventories at the beginning or end of the year.

Required:

Question 1. What would be Easton Pump Company's finished-goods inventory cost on December 31 under the variable-costing method? (Do not round intermediate calculations.)

Question 2-a. Which costing method, absorption or variable costing, would show a higher operating income for the year?

Question 2-b. By what amount? (Do not round intermediate calculations.)