Variable Costing Income Statement; Explanation of Difference in Net Operating Income

Refer to the data in Exercise 5-1 for Ida Sidha Karya Company. The absorption costing income statement prepared by the company's accountant for last year appears below:

Sales....................... $191,250 Cost of goods sold............. 157,500 Gross margin................. 33,750 Selling and administrative expense... 24,500 Net operating income............ $ 9,250

Required:

1. Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period.
2. Prepare an income statement for the year using variable costing. Explain the difference in net operating income between the two costing methods.