In your new job as an analyst for Golden Gurus, Inc., a company that manufacturers home gym equipment, you have been asked to determine the effect on income of using variable costing instead and absorption costing. The relevant data for one of the products, the Gut Buster, are as follows:

Unit Selling Price $49 Units in beginning inventory Units produced 100,000 Units sold 88,000 Variable costs per unit: Direct materials $12 Direct labor $8 Manufacturing overhead $6 Selling and administrative costs $2 Fixed costs: Manufacturing overhead $300,000 Selling and administrative costs $10,000