Selected information concerning the operation of Kern Company for the year ended December 31, 20X1, is available as follows:

Units produced	10,000
Units sold	9,000
Direct materials used	$40,000
Direct labor incurred	20,000
Fixed factory overhead	25,000
Variable factory overhead	12,000
Fixed selling and administrative expenses	30,000
Variable selling and administrative expenses	4,500
Finished goods inventory, January 1, 20X1	None

No work-in-process inventories existed at the beginning or end of 20X1.

Required:

1. What would be Kern’s finished goods inventory cost under the variable (direct) costing method at December 31, 20X1?

2. Which costing method—absorption or variable costing—would show a higher operating income for 20X1, and by what amount?