Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $880. Selected data for the companys operations last year follow:

Units in beginning inventory	0
Units produced	280
Units sold	240
Units in ending inventory	40
Variable costs per unit:
Direct materials	$ 115
Direct labor	$ 335
Variable manufacturing overhead	$ 35
Variable selling and administrative	$ 25
Fixed costs:
Fixed manufacturing overhead	$ 63,000
Fixed selling and administrative	$ 23,000

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

Sales	$ 211,200
Cost of goods sold	170,400
Gross margin	40,800
Selling and administrative expense	29,000
Net operating income	$ 11,800

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.