Babcock Company received the following reports of its defined benefit pension plan for the current calendar year:

PBO		Plan assets
Balance, January 1	$ 680,000	Balance, January 1	$ 530,000
Service cost	363,000	Actual return	58,000
Interest cost	70,000	Annual contribution	227,000
Benefits paid	(95,000)	Benefits paid	(95,000)
Balance, December 31	$ 1,018,000	Balance, December 31	$ 720,000

The long-term expected rate of return on plan assets is 8%. Assuming no other data are relevant, what is the pension expense for the year?

$363,000

$433,000

$390,600

$375,000