Ida Sidha Karya Company is a family-owned company located in the village of Gianyar on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $870. Selected data for the companys operations last year follow:

Units in beginning inventory 0

Units produced 260

Units sold 230

Units in ending inventory 30

Variable costs per unit:

Direct materials $ 105

Direct labor $ 325

Variable manufacturing overhead $ 45

Variable selling and administrative $ 15

Fixed costs:

Fixed manufacturing overhead $ 65,000

Fixed selling and administrative $ 21,000

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

Sales $ 200,100

Cost of goods sold 166,750

Gross margin 33,350

Selling and administrative expense 24,450

Net operating income $ 8,900

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.