da Sidha Karya 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 $970. Selected data for the companys operations last year follow:

Units in beginning inventory		0
Units produced		200
Units sold		180
Units in ending inventory		20
Variable costs per unit:
Direct materials	$	130
Direct labor	$	300
Variable manufacturing overhead	$	30
Variable selling and administrative	$	15
Fixed costs:
Fixed manufacturing overhead	$	63,000
Fixed selling and administrative	$	25,000

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

Sales	$	174,600
Cost of goods sold		139,500
Gross margin		35,100
Selling and administrative expense		27,700
Net operating income	$	7,400

Required:

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

2. Prepare an income statement for last year using variable costing. What is the amount of the difference in net operating income between the two costing methods?