Chan Company data for 2006 are as follows: Sales: 12,000 units at $17 each Actual production Expected

Chan Company data for 2006 are as follows:

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Sales: 12,000 units at $17 each Actual production Expected volume of production Manufacturing costs incurred: Variable 15,000 units 18,000 units $105,000 Fixed 63,000 Nonmanufacturing costs incurred: Variable $ 24,000 Fixed 18,000 1. Determine operating income for 2006, assuming the firm uses the vari- able costing approach to product costing. (Do not prepare a statement.) 2. Assume that there is no January 1, 2006, inventory; no variances are allocated to inventory; and the firm uses a "full absorption" approach to product costing. Compute (a) the cost assigned to December 31, 2006, inventory; and (b) operating income for the year ended December 31, 2006. (Do not prepare a statement.)