You are given the following information:

Units in beginning inventory	0
Units produced	40,000
Units sold	37,000
Selling price per unit	$120.00
Variable costs per unit:
Direct materials	$15.00
Direct labor	$30.00
Variable manufacturing overhead	$5.00
Variable selling and administrative	$3.00
Fixed expenses per year:
Fixed manufacturing overhead	$600,000
Fixed selling and administrative	$800,000

Based on this information, calculate the company's operating income under both absorption costing and variable costing approaches. If there is a difference between the two income numbers, show the reconciliation between the two.