1) A company that produces a single product had a net operating income of $95,000 using variable costing and a net operating income of $137,000 using absorption costing. Total fixed manufacturing overhead was $61,200 and production was 12,000 units both this year and last year. Last year was the first year of operations. Between the beginning and the end of the year, the inventory level: (Do not round intermediate computation and round your final answer to nearest whole number.)

1.decreased by 42,000 units

2.increased by 42,000 units

3.decreased by 8,235 units

4.increased by 8,235 units