Reeses Corporation manufactures bags of chocolate and peanut butter candies shipped on special pallets to keep them at a constant temperature. The companys actual and static budgeted volume was 200,000 pallets of product in its first year of operations. Variable manufacturing costs were $55 per pallet of product. Actual and static budget fixed manufacturing costs were $3,400,000, and selling and general costs were $1,000,000. Reeses sold 210,000 pallets that year for $80 per pallet. Reeses variable costing operating income is ________.

$800,000

$5,250,000

$1,850,000

$850,000