8-22 Easton Pump Companys planned production for the year just ended was 20,000 units. This production level was achieved, and 21,000 units were sold.

Direct material used..........................................................................$600,000.

Direct labor incurred ........................................................................... 300,000

Fixed manufacturing overhead.............................................................. 420,000

Variable manufacturing overhead...................................................... 200,000

Fixed selling and administrative expenses ........................................... 350,000

Variable selling and administrative expenses ....................................... 105,000

Finished-goods inventory, January 1 ...................................................2,000 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.

1. What would Easton Pump Companys finished-goods inventory cost on December 31 under the variable-costing method?
2. Which costing method, absorption, or variable costing, would show a higher operating income for the year? By what amount?