Please show detailed help with steps, and explain where all numbers come from, be ready for follow up questions on your help , Answer was shown as C) but I don't get how or why :
Two years ago, we started a company to manufacture and sell small sailboats. Below are our selected actual operating results for the first two years of operations (our cost structure and selling prices were the same in Year 1 and Year 2)
Units Produced: Year 1: 40,000
Units Sold: Year 1: 37,000
Absorption Costing Net Operating Income: Year 1: $77,500
Variable Costing Net Operating Income: Year 1: $71,500
Fixed Selling and Adminstrative Expense: Year 1 : $15,000
Units Produced: Year 2: 40,000
Units Sold: Year 2 : 41,000
Absorption Costing Net Operating Income: Year 2 : ???
Variable Costing Net Operating Income: Year 2 : ???
Fixed Selling and Adminstrative Expenses: Year 2 : $15,000
Question: What was our variable costing net operating income in Year 2 (rounded to nearest ten dollars)?
A) $87,250 B) $83,500 C) $89,500 D) $91.750 E) $95,850