Pandora Pillow Company's planned production for the year just ended was $10,000$ units. This production level was achieved, but only $9,000$ units were sold. Other data follow:

$$\begin{array}{lr} \text{ Direct material used } & \$ 40,000 \\ \text{ Direct labor incurred } & 20,000 \\ \text{ Fixed manufacturing overhead } & 25,000 \\ \text{ Variable manufacturing overhead } & 12,000 \\ \text{ Fixed selling and administrative expenses } & 30,000 \\ \text{ Variable selling and administrative expenses } & 4,500 \\ \text{ Finished-goods inventory, January 1 } & \text{ None } \end{array}$$

There were no work-in-process inventories at the beginning or end of the year.

$1.$ What would be Pandora Pillow Company's finished-goods inventory cost on December $31$ under the variable-costing method?

$2.$ Which costing method, absorption or variable costing, would show a higher operating income for the year? By what amount?

$3.$ Suppose Pandora Pillow Company uses throughput costing, and direct material is its only unit-level cost. What would be Pandora's finished-goods inventory on December $31$?

Easton Pump Company's planned production for the year just ended was $20,000$ units. This production level was achieved, and $21,000$ units were sold. Other data follow:

$$\begin{array}{lr} \text{ Direct material used } & \$ 600,000 \\ \text{ Direct labor incurred } & 300,000 \\ \text{ Fixed manufacturing overhead } & 420,000 \\ \text{ Variable manufacturing overhead } & 200,000 \\ \text{ Fixed selling and administrative expenses } & 350,000 \\ \text{ Variable selling and administrative expenses } & 105,000 \\ \text{ Finished-goods inventory, January 1 } & \quad 2,000 \text { units } \end{array}$$

There were no work-in-process inventories at the beginning or end of the year.

$1.$ What would be Easton Pump Company's finished-goods inventory cost on December $31$ under the variable-costing method?

$2.$ Which costing method, absorption or variable costing, would show a higher operating income for the year? By what amount?

Information taken from Tuscarora Paper Company's records for the most recent year is as follows:

$$\begin{array}{lr} \text{ Direct material used } & \$ 290,000 \\ \text{ Direct labor } & 100,000 \\ \text{ Variable manufacturing overhead } & 50,000 \\ \text{ Fixed manufacturing overhead } & 80,000 \\ \text{ Variable selling and administrative costs } & 40,000 \\ \text{ Fixed selling and administrative costs } & 20,000 \end{array}$$

$1.$ Assuming Tuscarora Paper Company uses variable costing, compute the inventoriable costs for the year.

$2.$ Compute the year's inventoriable costs using absorption costing.

$3.$ Now assume that Tuscarora Paper Company uses throughput costing, and the company has committed to spending for direct labor, variable overhead, and fixed overhead in the amounts given in the problem. Under this scenario, compute the company's inventoriable costs for the year.