Tarjee Manufacturing produces snow shovels. The selling price per snow shovel is $32.00. There is no beginning inventory.

Costs involved in production are:

Direct material $5.00

Direct labor 4.00

Variable manufacturing overhead 4.00

Total variable manufacturing costs per unit $13.00

Fixed manufacturing overhead per year $196,560

In addition, the company has fixed selling and administrative costs of $170,400 per year.

During the year, Tarjee produces 54,600 snow shovels and sells 49,950 snow shovels.

What is the value of ending inventory using full costing?

Value of ending inventory$

What is the value of ending inventory using variable costing?

Value of ending inventory$

Calculate the difference in full costing net income and variable costing net income without preparing either income statement.

Difference in net income $

What is cost of goods sold using full costing?

Cost of goods sold $

What is cost of goods sold using variable costing?

Variable cost of goods sold $

What is net income using full costing?

Net income

What is net income using variable costing?

Net income $

How much fixed manufacturing overhead is in ending inventory under full costing?

Fixed manufacturing overhead in ending inventory $

Compare this amount to the difference in the net incomes calculated in Exercise 5-13.

The amount of fixed manufacturing overhead in ending inventory under full costing is

greater than

less than

equal to

the difference in net income between full costing and variable costing.