Outback, Ltd., manufactures tactical LED flashlights in Melbourne, Australia. The firm uses an absorption-costing system for internal reporting purposes; however, the company is considering using variable costing. Data regarding planned and actual operations for 20x4 follow:

	Budgeted Costs
	Per Unit			Total			Actual Costs
Direct material	$	12.40		$	1,698,800		$	1,587,200
Direct labor		9.70			1,328,900			1,241,600
Variable manufacturing overhead		5.10			698,700			652,800
Fixed manufacturing overhead		4.10			561,700			570,700
Variable selling expenses		7.60			1,041,200			919,600
Fixed selling expenses		7.10			972,700			972,700
Variable administrative expenses		3.00			411,000			363,000
Fixed administrative expenses		2.60			356,200			362,200
Total	$	51.60		$	7,069,200		$	6,669,800

	Planned Activity		Actual Activity
Sales in units	137,000		121,000
Production in units	137,000		128,000
Beginning finished-goods inventory in units	43,000		43,000

The budgeted per-unit cost figures were based on the company producing and selling 137,000 units in 20x4. Outback uses a predetermined overhead rate for applying manufacturing overhead to its product. A total manufacturing overhead rate of $9.20 per unit was employed for absorption costing purposes in 20x4. Any overapplied or underapplied manufacturing overhead is closed to the Cost of Goods Sold account at the end of the year. The 20x4 beginning finished-goods inventory for absorption costing purposes was valued at the 20x3 budgeted unit manufacturing cost, which was the same as the 20x4 budgeted unit manufacturing cost. There are no work-in-process inventories at either the beginning or the end of the year. The planned and actual unit selling price for 20x4 was $70.90 per unit.

1.

Compute the value of Outbacks 20x4 ending finished-goods inventory under absorption costing.(Do not round intermediate calculations.)

2.

Compute the value of Outbacks 20x4 ending finished-goods inventory under variable costing. (Do not round intermediate calculations.)

3.	Compute the difference between Outbacks 20x4 reported operating income calculated under absorption costing and calculated under variable costing. (Do not round intermediate calculations.) Please explain the formulas you used and how you got your answer. Thanks!