Exercise 8-26 Absorption and Variable Costing (LO 8-1,8-4) Pinellas Pillow Company's planned production for the year just ended was 10,.000 units. This level was achieved, but only 9,000 units were sold. Other data follows: Oirect material used. Direct labor incurred..ss Fixed manufacturing overhead Variable manufacturing overhead Fixed selling and administrative expenses Variable selling and administrative expenses Finished-goods inventory, January 1 $80,000 40,000 50,000 24,000 60,000 9,000 None There were no work-in-process inventories at the beginning or end of the year Required: 1. What would be Pinellas Pillow Company's finished-goods inventory cost on December 31 under the variable-costing method? Which costing method, absorption or variable costing, would show a higher operating income for the year? By what amount? 2. CPA, adapted)