5 Exercise 19-6 Absorption costing income statement LO P2 1.42 points Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares the income statement under absorption costing for external reporting. For its first month of operations, 375 bikes were produced and 225 were sold; this left 150 bikes in ending inventory. The income statement information under variable costing follows. Sales (225 * $1,775) Variable product cost (225 * $675) Variable selling and administrative expenses (225 * $55) Contribution margin Fixed overhead cost Fixed selling and administrative expense Net income $ 399,375 151,875 12,375 235, 125 60,000 90,000 $ 85, 125 1. Prepare this company's income statement for its first month of operations under absorption costing. 2. Fill in the blanks: Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for the current year under absorption costing. KENZI KAYAKING Absorption Costing Income Statement Sales Less: Cost of goods sold Variable overhead costs x $ 313,125 X Fixed overhead costs (125,250) 399,375 Cost of goods sold Gross margin Selling general and administrative expenses Fixed selling and administrative costs Variable selling and administrative expenses OOOOOOOO 187,875 211,500 $ (12,375) (90,000) X Total selling general and administrative expenses Net income (loss) (102,375) 109,125 $ Net income under absorption costing is higher than net income under variable costing by: Fixed costs added to inventory Required 1 Required 2 > Required 1 Required 2 Fill in the blanks: The dollar difference in variable costing income and absorption costing $ 150 units 835 x fixed overhead per unit. income =