Stark and Company would like to evaluate one of the product lines that they sell to the defense department. Every month the Stark and Company produce an identical number of units, although the sales in units differ from month to month.

Selling price	$130
Units in beginning inventory	0
Units produced	6,400
Units sold	6,100
Units in ending inventory	?
Variable costs per unit:
Direct materials	$62
Direct labour	$48
Variable manufacturing overhead	$3
Variable selling and administrative	$7
Fixed costs:
Fixed manufacturing overhead	$64,000
Fixed selling and administrative	$35,600

What is the operating income under the absorption costing method?

Select one:

a. $135,600 gain.

b. $35,600 loss.

c. $135,600 loss.

d. $35,600 gain