During its first year of operations, the McCormick Company incurred the following manufacturing costs:

Direct materials	$7	per unit
Direct labor	$5	per unit
Variable overhead	$6	per unit
Fixed overhead	$350,000	per year

The company produced 35,000 units, and sold 28,000 units, leaving 7,000 units in inventory at year-end. Income calculated under variable costing is determined to be $395,000. How much income is reported under absorption costing?

Multiple Choice

$395,000

$325,000

$745,000

$465,000

$406,000