Dumb Plastics began operations on January 1, 2019.The company sells a single product for $91 per unit.

Ending inventory on December 31, 2019 was 1,400 units at $59 per unit absorption costing and $51 per unit variable costing.

During 2020, 10,000 units were produced and 10,500 units were sold. There was no work in process inventory on December 31, 2020.

The company uses FIFO (first-in, first-out) inventory system. Costs for 2020 were as follows:

Cost Item Fixed Component Variable Component

Direct materials $0 $25.00 per unit produced

Direct labor $0 $17.00 per unit produced

Manufacturing overhead $90,000 $ 9.00 per unit produced

Selling& Administration $115,000 $ 1.50 per unit sold

Question

If the operating income in 2020 under the absorption costing method is $196,150, what is the operating income in 2020 under the variable costing method? Clearly show how you arrive at the amount. (no need for income statement)