Exercise 8-23 Absorption and Variable Costing (LO 8-1, 8-4) Pandora Pillow Company's planned production for the year just ended was 21,900 units. This production level was achieved, but only 18,600 units were sold. Other data follow: Direct material used Direct labor incurred Fixed manufacturing overhead Variable manufacturing overhead Fixed selling and administrative expenses Variable selling and administrative expenses Finished-goods inventory, January 1 $654,810 332,880 451,140 212,430 396, 390 106, 215 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 Company's 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.) 1. Finished-goods inventory cost 2-a. Higher operating income method 2-b. Difference in reported income $ 180,840 Absorption costing