Pandora Pillow Companys planned production for the year just ended was 21,700 units. This production level was achieved, but only 18,800 units were sold. Other data follow: Direct material used $ 672,700 Direct labor incurred 340,690 Fixed manufacturing overhead 457,870 Variable manufacturing overhead 206,150 Fixed selling and administrative expenses 392,770 Variable selling and administrative expenses 98,735 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 the operating income differs between the costing methods, absorption or variable costing? (Do not round intermediate calculations.)

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