Start Me Up, Inc., manufacturers a caffeinated energy drink that sells for $4.00 each. The results for their first year of operations appear in the table below.

Number of drinks produced...........................52000

Number of drinks sold....................................50000

Direct materials per drink.............................0.55

Direct labor per drink.....................................0.25

Variable manufacturing overhead per drink............0.15

Total fixed manufacturing overhead.......................39000

Total fixed selling and administrative costs.............50000

Required

1. Compute the operating income for the first year under absorption costing.

2. Compute the operating income for the first year under variable costing.