Chan Manufacturing Company data for 2010 are as follows:Sales: 12,000

Chan Manufacturing Company data for 2010 are as follows:

Sales: 12,000 units at $18 each
Actual production ........................................................15,000 units
Expected volume of production ................................18,000 units
Manufacturing costs incurred
Variable ............................................................................$120,000
Fixed .....................................................................................60,000
Non-manufacturing costs incurred
Variable ............................................................................$ 24,000
Fixed ....................................................................................18,000

1. Determine operating income for 2010, assuming the firm uses the variable costing approach to product costing. (Do not prepare a statement.)

2. Assume that there is no January 1, 2010, 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, 2010, inventory; and (b) operating income for the year ended December 31, 2010. (Do not prepare a statement.)

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