Carr Company produces a single product. During the past year, Carr manufactured 34,060 units and sold 28,600 units. Production costs for the year were as follows:

Direct materials	$255,450
Direct labor	$173,706
Variable manufacturing overhead	$269,074
Fixed manufacturing overhead	$510,900

Sales were $1,172,600 for the year, variable selling and administrative expenses were $148,720, and fixed selling and administrative expenses were $214,578. There was no beginning inventory. Assume that direct labor is a variable cost.

Under variable costing, the company's net operating income for the year would be:

$81,900 higher than under absorption costing

$81,900 lower than under absorption costing

$27,846 higher than under absorption costing

$27,846 lower than under absorption costing