ABC Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $920. Selected data for the companys operations last year follow:

Units in beginning inventory		0
Units produced		275
Units sold		260
Units in ending inventory		15
Variable costs per unit:
Direct materials	$	110
Direct labor	$	320
Variable manufacturing overhead	$	40
Variable selling and administrative	$	15
Fixed costs:
Fixed manufacturing overhead	$	77,000
Fixed selling and administrative	$	33,000

The absorption costing income statement prepared by the companys accountant for last year appears below:

Sales	$	239,200
Cost of goods sold		195,000
Gross margin		44,200
Selling and administrative expense		36,900
Net operating income	$	7,300

Part 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year?

fixed manufacturing overhead cost include in inventory ___________

Part 2. Prepare Income Statement using variable costing

Part 3. What is the amount of the difference in net operating income between the two costing methods?

____________________

Variable Costing Income Statement 0 0 0 0