Easton Pump Company’s planned production for the year just ended was 18,200 units. This production level...

Easton Pump Company’s planned production for the year just ended was 18,200 units. This production level was achieved, and 21,800 units were sold. Other data follow:


Direct material used	$	562,380
Direct labor incurred		291,200
Fixed manufacturing overhead		393,120
Variable manufacturing overhead		191,100
Fixed selling and administrative expenses		303,940
Variable selling and administrative expenses		91,910
Finished-goods inventory, January 1		4,500	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:

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.)

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

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

Expert Solution

ekkarill92 answered 2 years ago

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