Krepps Corporation produces a single product. Last year, Krepps manufactured 33,100 units and sold 27,800 units. Production costs for the year were as follows: Direct materials $ 248,250 Direct labor $ 145,640 Variable manufacturing overhead $ 274,730 Fixed manufacturing overhead $ 595,800 Sales totaled $1,320,500 for the year, variable selling and administrative expenses totaled $164,020, and fixed selling and administrative expenses totaled $205,220. 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 $26,500 lower than under absorption costing. $26,500 higher than under absorption costing. $95,400 lower than under absorption costing. $95,400 higher than under absorption costing.

Krepps Corporation produces a single product. Last year, Krepps manufactured 33,100 units and sold 27,800 units. Production costs for the year were as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $248, 250 $145,640 $274,730 $595,800 Sales totaled $1,320,500 for the year, variable selling and administrative expenses totaled $164,020, and fixed selling and administrative expenses totaled $205,220. 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