Sales: 12,500 units at $18 each
Actual production	13,000 units
Expected volume of production	20,000 units
Manufacturing costs incurred
Variable	$117,000
Fixed	62,000
Nonmanufacturing costs incurred
Variable	$25,000
Fixed	18,500

1. Determine operating income for 2010, assuming the firm uses the variable-costing approach to product costing. (Do not prepare a statement.)

Sales	-	Total variable costs	-	Total fixed costs	=	Operating income
	-		-		=

2. Assume that there is no January 1, 2010, inventory; no variances are allocated to inventory; and the firm uses a "full absorption" approach to product costing.

(a) Compute the cost assigned to December 31, 2010, inventory. (Round the unit cost to four decimal places and the ending inventory cost to the nearest dollar.)

Ending inventory units	x	Unit cost	=	Ending inventory cost
	x		=

(b) Compute operating income for the year ended December 31, 2010. (Do not prepare a statement.)

Sales	- (	Total costs	-	Costs in inventory	) =	Operating income
	- (		-		) =