Exercise 8-23 Absorption and Variable Costing (LO 8-1, 8-4) Pandora Pillow Companys planned production for...
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Exercise 8-23 Absorption and Variable Costing (LO 8-1, 8-4) Pandora Pillow Companys planned production for the year just ended was 22,100 units. This production level was achieved, but only 18,700 units were sold. Other data follow: Direct material used $ 663,000 Direct labor incurred 329,290 Fixed manufacturing overhead 472,940 Variable manufacturing overhead 201,110 Fixed selling and administrative expenses 375,700 Variable selling and administrative expenses 127,075 Finished-goods inventory, January 1 None The cost per unit remained the same in the current year as in the previous year. There were no work-in-process inventories at the beginning or end of the year. Required: 1. What would be Pandora Pillow Companys finished-goods inventory cost on December 31 under the variable-costing method? (Do not round intermediate calculations.) 2-a. Which costing method, absorption or variable costing, would show a higher operating income for the year? 2-b. By what amount? (Do not round intermediate calculations.)
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