a.

b.

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 x $1,750) Variable product cost (225 x $625) Variable selling and administrative expenses (225 x $55) Contribution margin Fixed overhead cost Fixed selling and administrative expense Net income $ 393,750 140,625 12,375 240,750 60,000 75,000 $ 105,750 1. Prepare this company's income statement for its first month of operations under absorption costing. 2. Fill in the blanks: 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 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 x $1,750) Variable product cost (225 x $625) Variable selling and administrative expenses (225 x $55) Contribution margin Fixed overhead cost Fixed selling and administrative expense Net income $ 393,750 140,625 12,375 240,750 60,000 75,000 $ 105,750 1. Prepare this company's income statement for its first month of operations under absorption costing. 2. Fill in the blanks: Complete this question by entering your answers in the tabs below. Required 1 Required 2 Fill in the blanks: The dollar difference in variable costing income and absorption costing income = units fixed overhead per unit.