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Altoona Valve Company’s planned production for the year just ended was 18,300 units. This production level...

Altoona Valve Company’s planned production for the year just ended was 18,300 units. This production level was achieved, and 20,500 units were sold. Other data follow:

  

  Direct material used $ 549,000
  Direct labor incurred 287,310
  Fixed manufacturing overhead 373,320
  Variable manufacturing overhead 177,510
  Fixed selling and administrative expenses 307,440
  Variable selling and administrative expenses 92,415
  Finished-goods inventory, January 1 3,100 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 Altoona Valve Company’s finished-goods inventory cost on December 31 under the variable-costing method? (Do not round your intermediate calculations.)

Finished-goods inventory cost

      

2-a.

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

Variable costing

Absorption costing


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

Difference in reported income      

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