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Langdon

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Langdon Company produced 9,000 units during the past year, but only 8,200 of the
units were sold. The following additional information is also available.

Direct materials used  79,000
Direct labor incurred  30,000
Variable manufacturing overhead   21,500
Fixed manufacturing overhead  45,000
 Fixed selling and adm. Expenses  700,000
Variable selling and adm. Expenses  10,000

There was no work in process inventory at the beginning of the year, nor did Langdon have
any beginning finished goods inventory.

Instructions
(a) What would be Langdon Company’s finished goods inventory cost on December 31
under variable costing?
(b) Which costing method, absorption or variable costing, would show a higher net income
for the year? By what amount?

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