Kwan Manufacturing Company data for 20X0 follow:

Sales: 11,000 units at ………………… $19 each

Actual production ………………… 15,500 units

Expected volume of production ….. 15,000 units

Manufacturing costs incurred

Variable …………………………….. $124,000

Fixed ………………………………….. 54,000

Nonmanufacturing costs incurred

Variable ……………………………. $ 11,000

Fixed ………………………………… 17,800

1. Determine operating income for 20X0, assuming the firm uses the variable-costing approach to product costing. (Do not prepare a statement.)

2. Assume that there is no January 1, 20X0, inventory; no variances are allocated to inventory; and the firm uses a “full absorption” approach to product costing. Compute (a) the cost assigned to December 31, 20X0, inventory, and (b) operating income for the year ended December 31, 20X0.