Krepps Corporation produces a single product. Last year, Krepps manufactured 32,900 units and sold 27,500 units. Production costs for the year were as follows:

Direct materials	$ 253,330
Direct labor	$ 171,080
Variable manufacturing overhead	$ 289,520
Fixed manufacturing overhead	$ 592,200

Sales totaled $1,168,750 for the year, variable selling and administrative expenses totaled $148,500, and fixed selling and administrative expenses totaled $227,010. 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

$97,200 higher than under absorption costing.

$30,780 higher than under absorption costing.

$30,780 lower than under absorption costing.

$97,200 lower than under absorption costing.