Kilihea Corporation produces a single product. The company's absorption costing income statement for July follows:

The company's variable production costs are $22.60 per unit and its fixed manufacturing overhead totals $122,600 per month.

Net operating income under the variable costing method for July would be:

1. $70,400

2. $57,200

3. $63,800

4. $54,000

(show me how you solve it please)

Kilihea Corporation Income Statement For the month ended July 31 $710,500 443,700 266,800 Sales (14,500 units) Cost of goods solod Gross margin Selling and administrative expenses Fixed Variable Total selling and administrative expense Net operating income 130,500 72,500 03,000 $63,800