Exercise 06-4 Variable costing income statement LO P2 Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,025 kayaks and sold 775 at a price of $1,025 each. At this first year-end, the company reported the following income statement information using absorption costing. $ Sales (775 x $1,025) Cost of goods sold (775 x $475) Gross margin Selling and administrative expenses Net income 794,375 368, 125 426, 250 230,000 196,250 $ Additional Information a. Product cost per kayak totals $475, which consists of $375 in variable production cost and $100 in fixed production cost-the latter amount is based on $102,500 of fixed production costs allocated to the 1,025 kayaks produced. b. The $230,000 in selling and administrative expense consists of $85,000 that is variable and $145.000 that is fixed. Required: 1. Prepare an income statement for the current year under variable costing. 2. Fill in the blanks: Required 1 Required 2 Prepare an income statement for the current year under variable costing. KENZI KAYAKING Variable Costing Income Statement Net income (loss) Fixed costs added to inventory Required 1 Required 2 Fill in the blanks: "he dollar difference in variable costing income and absorption costing income = P units fixed overhead per unit