During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials, $5 per unit, Direct labor, $3 per unit, Variable overhead, $4 per unit, and Fixed overhead, $200,000. The company produced 25,000 units, and sold 17,500 units, leaving 7,500 units in inventory at year-end. Income calculated under variable costing is determined to be $345,000. How much income is reported under absorption costing?

$345,000

$285,000

$545,000

$405,000

Accurate Metal Company sold 35,000 units of its product at a price of $310 per unit. Total variable cost per unit is $179, consisting of $163 in variable production cost and $5 in variable selling and administrative cost. Compute the manufacturing margin for the company under variable costing.

$10,850,000

$6,265,000

$6,090,000

$5,145,000

$4,970,000