2. Adam Company has the following cost structure for Year 1:

Variable Costs:
Manufacturing	$6 per unit produced
Selling and Administrative	$2 per unit produced
Fixed Costs
Manufacturing	$250,000 per year
Selling and Administrative	$120,000 per year

During Year 1, 100,000 units were produced and 95,000 units were sold. There was no beginning inventory. The selling price was $14 per unit. What is operating income for Year 1 using absorption costing?

1. $200,000
2. $212,500
3. $202,500
4. $190,000