Chan Manufacturing Company data for 20X7 follow:
Sales: 12,000 units at $17 each
Actual production 15,000 units
Expected volume of production 18,000 units
Manufacturing costs incurred
Variable $120,000
Fixed 63,000
Nonmanufacturing costs incurred
Variable $ 24,000
Fixed 18,000
1. Find out operating income for 20X7, suppose firm uses variable-costing approach to product costing. (Don't prepare statement.)
2. Supppose that there is no January 1, 20X7, inventory; no variances are assigned to inventory; and firm uses a full absorption approach to product costing. Calculate (a) cost allocated to December 31, 20X7, inventory; and (b) operating income for year ended December 31, 20X7.