Kern Company produces a single product. Selected information concerning the operations of the company follow:

Units in beginning inventory............... 0

Units produced................................10,000

Units Sold........................................9,000

Direct Materials.............................$40,000

Direct Labor...................................$20,000

Variable factory overhead..............$12,000

Fixed Factory overhead.................$25,000

Variable selling administrative expenses.....$4,500

Fixed Selling and administrative expenses...$30,000

Assume that direct labor is a variable cost. Which costing method, absorption or variable costing, would show a higher operating income for the year and by what amount?

A.Absorption costing net operating income would be higher than variable costing net operating income by $2,500.

B.Variable costing net operating income would be higher than absorption costing net operating income by $2,500.

C.Absorption costing net operating income would be higher than variable costing net operating income by $5,500.

D.Variable costing net operating income would be higher than absorption costing net operating income by $5,500.