Spring Company has the following information related to the manufacture and sale of garden tools for Year 1 and Year 2 of operations:

Year 1 Year 2

Production units 28,000 22,000

Sales price per $66.00 $66.00

Units sold 20,000 27,000

Direct Materials per unit $12.0 $12.00

Direct Labor per unit $18.00 $18.00

Variable Manufacturing OH per unit $ 9.00 $ 9.00

Fixed Manufacturing OH costs $180,000 $180,000

Variable Selling & Admin costs per unit $ 6.00 $ 6.00

Fixed Selling & Admin costs $ 60,000 $ 60,000

There was no beginning inventory in Year 1.

Using Variable Costing, what is Operating Income for Year 1?

a. $732,000

b. $180,000

c. $132,000

d. $780,000

Hobbies Inc. has the following information related to the manufacture and sale of craft items for Year 1 and Year 2:

Year 1 Year 2

Production units 3,000 2,750

Sales price per unit $70.00 $70.00

Units sold 2,250 3,200

Direct Materials per unit $10.00 $10.00

Direct Labor per unit $ 6.00 $ 6.00

Variable Manufacturing OH per unit $ 3.00 $ 3.00

Fixed Manufacturing OH costs $ 55,000 $ 55,000

Variable Selling & Admin costs per unit $ 2.00 $ 2.00

Fixed Selling & Admin costs $ 20,000 $ 20,000

There was no beginning inventory in Year 1.

Using Variable Costing, what is the value of Ending Inventory in Year 2?

A.

$ 1,350

B.

$ 8,550

C.

$ 5,700

D.

$ 900