The Colin Division of Sunland Company sells its product for $30 per unit. Variable costs per unit include: manufacturing, $11; and selling and administrative, $2. Fixed costs are: $240000 manufacturing overhead, and $54000 selling and administrative. There was no beginning inventory. Expected sales for next year are 40000 units. Charles Wilson, the manager of the Colin Division, is under pressure to improve the performance of the Division. As part of the planning process, he has to decide whether to produce 40000 units or 54000 units next year.
What would the net income be under variable costing for each alternative?