Information from Hope Company's records for the year ended December 31, 2015 is available as follows:

Net sales

$2,800,000

Cost of goods manufactured:

Variable

$1,260,000

Fixed

$630,000

Operating expenses:

Variable

$196,000

Fixed

$240,000

Units manufactured

70,000

Units sold

60,000

Finished goods inventory, 1/1/2015

$0

Hope had no work-in-process inventories at either the beginning or end of 2015.

a.What would be Hope's finished goods inventory cost under the variable (direct) costing method at December 31, 2015? (20 points)

b.What would Hope's operating income be under the absorption costing method? (20 points)