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 sounding bars are cast from brass and hand-filed to attain just the right sound. The bars are then mounted on an intricately hand-carved wooden base. The gamelans are sold for $910 Selected data for the company's operations last year follow Units in beginning inventory 0 Units produced 300 Units sold 270 Units in ending inventory 30 Variable costs per unit: Direct materials $140 Direct labor $350 Variable manufacturing overhead $35 Variable selling and administrative $15 Fixed costs: Fixed manufacturing overhead $69,000 Fixed selling and administrative $26,000 ________________________________________ Sales $245,700 Cost of goods sold $203,850 Gross margin $41,850 Selling and administrative expenses $30,050 Net operating income $11,800 ________________________________________

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. What is the amount of the difference in net operating income between the two costing methods?

3.What is the amount of the difference in net operating income between the two costing methods?