Pandora Pillow Companys planned production for the year just ended was 21,800 units. This production level was achieved, but only 18,000 units were sold. Other data follow:

Direct material used	$	649,640
Direct labor incurred		316,100
Fixed manufacturing overhead		457,800
Variable manufacturing overhead		231,080
Fixed selling and administrative expenses		359,700
Variable selling and administrative expenses		112,270
Finished-goods inventory, January 1		None

The cost per unit remained the same in the current year as in the previous year. There were no work-in-process inventories at the beginning or end of the year. Required: 1. What would be Pandora Pillow Companys finished-goods inventory cost on December 31 under the variable-costing method? (Do not round intermediate calculations.) 2-a. Which costing method, absorption or variable costing, would show a higher operating income for the year? 2-b. By what amount? (Do not round intermediate calculations.)

1. Finished-goods inventory cost 2-a. Higher operating income method 2-b. Difference in reported income