Start Me Up Inc. manufactures a caffeinated energy drink that sells for $4.20 each. The results for its first year of operations appear in the table below:

Number of drinks produced		48,500
Number of drinks sold		46,100
Direct materials per drink	$	0.57
Direct labor per drink	$	0.27
Variable manufacturing overhead per drink	$	0.17
Total fixed manufacturing overhead	$	29,585
Total fixed selling and administrative costs	$	51,000

Required:

1. Compute the operating income for the first year under full costing.

2. Compute the operating income for the first year under variable costing.