Selected information concerning the operation of Kern Company for the year ended December 31, 2008 is available as follows:

No work-in-process inventories existed at the beginning or end of 2008.
Required:
1. What would be Kern’s finished goods inventory cost under the variable (direct) costing method at December 31, 2008?
2. Which costing method—absorption or variable costing—would show a higher operating income for 2008, and by what amount?

Transcribed Image Text:

Units produced Units sold Direct materials used Direct labor incurred Fixed factory overhead Variable factory overhead Fixed selling and administrative expenses Variable selling and administrative expenses Finished goods inventory, January 1, 2008 10,000 9,000 $40,000 $20,000 $25,000 $12,000 $30,000 $ 4,500 None