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Better Food Market (BFM) is a local grocery store that uses an absorption costing approach when pricing their goods, in order to make sure that their fixed costs are covered. All costs except purchasing-related variable costs (such as the supplier price of the goods and the shipping costs) are considered fixed costs and are allocated to inventory. The allocation is made when each item is purchased, and is based on the sales mark-up of each item, at a rate of $0.75/dollar of mark-up. Any under- or over-applied overhead is closed to Cost of Goods Sold Financial information for this month and last month are as follows End of Month Data Sales Variable Costs Fixed Costs in Ending Inventory Last Month S150,000 75,000 20,000 This Month $200,000 100,000 25,000 Over-applied overhead for this month was $2,000. The owners of BFM want to increase income, and want to know if the best way to do that is to increase sales volume or to barter with suppliers for lower prices. To assist in making the decision, they want to know what Operating Income would be under Variable costing rather than Absorption costing, in order to remove the effect of inventoried fixed costs. What would Variable Operating Income be this month