Krepps Corporation produces a single product. Last year, Krepps manufactured 35,250 units and sold 29,700 units. Production costs for the year were as follows:

Direct materials	$ 257,325
Direct labor	$ 179,775
Variable manufacturing overhead	$ 267,900
Fixed manufacturing overhead	$ 634,500

Sales totaled $1,351,350 for the year, variable selling and administrative expenses totaled $151,470, and fixed selling and administrative expenses totaled $257,325. There was no beginning inventory. Assume that direct labor is a variable cost.

Under variable costing, the company's net operating income for the year would be:

Multiple Choice

$99,900 higher than under absorption costing.

$99,900 lower than under absorption costing.

$33,855 lower than under absorption costing.

$33,855 higher than under absorption costing.