During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials, $5 per unit, Direct labor, $2 per unit, Variable overhead, $4 per unit, and Fixed overhead, $324,000. The company produced 36,000 units, and sold 28,500 units, leaving 7,500 units in inventory at year-end. Income calculated under variable costing is determined to be $400,000. How much income is reported under absorption costing?

Multiple Choice

• $400,000

• $332,500

• $724,000

• $467,500