Assume Stassen Company on January 1, 2018, decides to contract with another company to preassemble a large percentage of the components of its telescopes. The revised manufacturing cost structure during the 20182019 period is as follows: Variable manufacturing cost per unit produced:

Direct materials $ 285 Direct manufacturing labor 15 Manufacturing overhead 10 Total variable manufacturing cost per unit produced $ $310 Fixed manufacturing costs $390,000 Under the revised cost structure, a larger percentage of Stassens manufacturing costs are variable for units produced. The denominator level of production used to calculate budgeted fixed manufacturing cost per unit in 2018 and 2019 is 9,500 units. Summary information pertaining to absorption-costing operating income and variable-costing operating income with this revised cost structure are as follows:

2018 2019 Absorption-costing operating income $1,600,000 $1,760,000 Variable-costing operating income $1,480,000 $1,850,000 Difference $120,000 $ (90,000)

Required: 1. Compute the budgeted fixed manufacturing cost per unit in 2018 and 2019.

2. Explain the difference between absorption-costing operating income and variable- costing operating income in 2018 and 2019, focusing on fixed manufacturing costs in

beginning and ending inventory.