Fagan Manufacturing uses an absorption costing system. In 2009 it manufactured 25,000 units and sold 20,000 units at $45 each. The company's income statement for year ended December 31 2009 is as follows:

FAGAN MANUFACTURING COMPANY

INCOME STATEMENT

FOR THE YEAR ENDING DECEMBER 31, 2009

Sales $900,000

Cost of goods sold: Finished goods inventory, January 1 $0 Cost of goods manufactured 812,500 Goods available for sale $812,500 Finished goods inventory, December 31 162,500 Cost of goods sold 650,000 Gross margin $250,000 Less Operating expenses: Selling $135,000 Administrative 30,000 Total selling and administrative 165,000 Operating profit $85,000 The following additional information is available: Variable costs per unit: Direct materials $9.50 Direct labor 12.00 Manufacturing overhead 4.00 Selling expenses 5.50 Fixed costs for the period: Manufacturing overhead $175,000 Selling 25,000 Administrative 30,000

1.In absorption costing, how much fixed manufacturing overhead cost was deferred (that is not expensed)in finished goods inventory?

ii. an income statement using variable costing.