Fields Cutlery, a manufacturer of gourmet knife sets, produced 20,000 sets and sold 23,000 units during the current year. Beginning inventory under absorption costing consisted of 3,000 units valued at $66,000 (Direct materials $12 per unit; Direct labor, $3 per unit; Variable Overhead, $2 per unit, and Fixed overhead, $5 per unit.) All manufacturing costs have remained constant over the 2-year period. At year-end the company reported the following income statement using absorption costing:

Sales (23,000 $45)		$1,035,000
Cost of goods sold (23,000 $22)		506,000
Gross margin		$529,000
Selling and administrative expenses		115,000000
Net income		$414,000

60% of total selling and administrative expenses are variable. Compute net income under variable costing.

		$414,000
		$399,000
		$529,000
		$429,000
		$644,000