Vandervlies Products began operations on January 3 of the current year. Standard costs were established in early January assuming a normal production volume of 160,000 units. However, the company produced only 140,000 units of product and sold only 100,000 units at a selling price of $180 per unit during the current year. Variable costs totaled $7,000,000, of which 60% were manufacturing and 40% were selling. Fixed costs totaled $11,200,000, of which 50% were manufacturing and 50% were selling. There were no raw materials or work in process inventories at the end of the year. Actual input prices per unit of product and actual input quantities per unit of product were equal to standard.
Required:
(1) Determine cost of goods sold at standard cost, using absorption costing (excluding standard cost variances).
(2) How much cost would be assigned to ending inventory using direct costing?
(3) Compute the factory overhead volume variance for the year.
(4) How much would operating income be, using direct costing?