Q1) Wiengot Antennas, Inc., manufactures and sells a unique type of TV antenna. Company has just opened new plant of manufacture antenna, and following cost and revenue data have been given for first month of plant's operation in form of worksheet.
| Beginning inventory |
$0 |
| Units Produced |
40,000 |
| Units Sold |
35,000 |
| Selling price per unit |
$60 |
| Selling and administrative expenses: |
| Variable per unit |
$2 |
| Fixed (total) |
$560,000 |
| Manufacturing costs: |
| Direct material cost per unit |
$15 |
| Direct labor cost per unit |
$7 |
| Variable manufacturing overhead cost per unit |
$2 |
| Fixed manufacturing overhead cost (total) |
$640,000 |
As new antenna is unique in design, management is anxious to see how profitable it will be and has asked that income statement be prepared for month.
Question:
Describe reason for any difference in ending inventory balances under two costing methods and impact of this difference on reported net operating income.