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 company's operations last year follow:

Units in beginning inventory0

Units produced250

Units sold230

Units in ending inventory20

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 company's accountant for last year appears below:

Sales$ 227,700

Cost of goods sold186,300

Gross margin41,400

Selling and administrative expense34,750

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.