Tim's Tools, a manufacturer of cordless drills, began operations this year. During this year, the company produced 20,000 units and sold 18,000 units. At year-end the company reported the following income statement using absorption costing:

Sales (18,000 $30)		$540,000
Cost of goods sold (18,000 $14)		252,000
Gross margin		$288,000
Selling and administrative expenses		90,000
Net income		$198,000

Production costs per unit total $14, which consists of $12.90 in variable production costs and $1.10 in fixed production costs (based on the 20,000 units produced). 60% of total selling and administrative expenses are variable. Compute net income under variable costing