Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $990. Selected data for the companys operations last year follow:

Units in beginning inventory 0

Units produced 250

Units sold 230

Units in ending inventory 20

Variable costs per unit:

Direct materials $ 145

Direct labor $ 365

Variable manufacturing overhead $ 40

Variable selling and administrative $ 25

Fixed costs:

Fixed manufacturing overhead $ 65,000

Fixed selling and administrative $ 29,000

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

Sales $ 227,700

Cost of goods sold 186,300

Gross margin 41,400

Selling and administrative expense 34,750

Net operating income $ 6,650

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.