Accustart Manufacturing produces snow shovels. The selling price per snow shovel is $28.00. There is no beginning inventory.

Costs involved in production:

Direct material $6.00

Direct labor $4.00

Variable manufacturing overhead $4.00

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Total variable manufacturing costs per unit $14.00

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Fixed manufacturing overhead per year $196,560

In addition, the company has a fixed selling and administrative cost of $170,900 per year. During the year, Accustart produces 50,400 shovels and sells 45,390 shovels.

Value of ending inventory (full costing) $89,679

Value of ending inventory (variable costing) $70,140

Difference in full costing net income and variable costing net income without preparing either income statement: $19,539

Cost of goods sold using full costing $812,481

Cost of goods sold using variable costing 635,480

What is net income using full costing 287,539

Net income using variable costing$268,000

How much fixed manufacturing overhead is in ending inventory under full costing?

Compare this amount to the difference in the net incomes calculated in Exercise 5.13 (see below)

The amount of fixed manufacturing overhead in ending inventory under full costing is _________ (equal to, greater than, less than) the difference in net income between full costing and variable costing.

5.13 Calculate the difference in full costing net income and variable costing net income without preparing either income statement: Answer - Difference in net income = $19,539.

Shovels produced50,400

Shovels sold (45,390)

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Shovels in ending inventory 5,010

x Fixed manufacturing overhead per unit ($3.90)

= Difference in net income $19,539