Start Me Up Inc. manufactures a caffeinated energy drink that sells for $4 each. The results for its first year of operations appear in the table below:

ProjectionsNumber of drinks produced52,000Number of drinks sold50,000Direct materials per drink$0.55Direct labor per drink$0.25Variable manufacturing overhead per drink$0.15Total fixed manufacturing overhead$39,000Total fixed selling and administrative costs$50,000

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.