Elizabeth began the year with no inventory. During the year, she sold 46,300 items for $ 16 each, incurring $ 0.50 in selling costs per item plus $ 4,900 in advertising and other selling expenses. (a) Under variable costing, what is Elizabeths operating income?

(b) Under absorption costing, what is Elizabeths ending Finished Goods Inventory balance?

Elizabeth Brown sells handmade jewelry that she designs herself. The items aren't expensive, and she has a loyal following in her town and the surrounding area. Elizabeth incurred the following unit costs to produce 63,900 items. Direct materials $ 3.10 Direct labor $ 1.77 Variable overhead $0.73 Fixed overhead $ 4.24