Sunshine company produces and sells one model of washing machines. A machine sells for $450. The company uses variable costing for internal reporting and absorption costing for external reporting. The data for the first year of operations is given below:

Direct marterals $150/unit

Direct labor $45/unit

Variable manfacturing overhead $25/unit

Fixed manfacturing overhead $200,000per year

Fixed maketing and administrative expenses $110,000 per year

Variable maketing and administrative expenses $15/unit sold

The company produced 10,000 units and sold 8,000 units during the year.

1. Compute unit product cost under variable costing and absorption costing.

2. Compute net income under variable and absorption costing.

3.What is the ending inventory cost under variable and absorption costing?

4. Explain the difference in net income and ending inventory.