Assume the following information for a company that produced 10,000 units and sold 9,000 units during its first year of operations:

	Per Unit	Per Year
Selling price	$ 200
Direct materials	$ 79
Direct labor	$ 50
Variable manufacturing overhead	$ 10
Sales commission	$ 8
Fixed manufacturing overhead		$ 294,000

Which of the following choices explains the relationship between the absorption costing net operating income and the variable costing net operating income?

Multiple Choice

• The absorption costing net operating income will be higher than the variable costing net operating income by $29,400.

• The absorption costing net operating income will be lower than the variable costing net operating income by $29,400.

• The absorption costing net operating income will be higher than the variable costing net operating income by $101,400.

• The absorption costing net operating income will be lower than the variable costing net operating income by $101,400.