Exercise 19-4 Variable costing income statement LO P2 Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,075 kayaks and sold 825 at a price of $1,075 each. At this first year-end, the company reported the following income statement information using absorption costing. $ Sales (825 $1,075) Cost of goods sold (825 * $ 425) Gross margin Selling and administrative expenses Net income 886,875 350, 625 536, 250 220,000 316, 250 Additional Information a. Product cost per kayak totals $425, which consists of $325 in variable production cost and $100 in fixed production costthe latter amount is based on $107,500 of fixed production costs allocated to the 1,075 kayaks produced. b. The $220,000 in selling and administrative expense consists of $85,000 that is variable and $135,000 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. Prepare an income statement for the current year under variable 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 X fixed overhead per unit. 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, 325 bikes were produced and 215 were sold; this left 110 bikes in ending inventory. The income statement information under variable costing follows. Sales (215 * $1,775) Variable product cost (215 x $625) Variable selling and administrative expenses (215 * $60) Contribution margin Fixed overhead cost Fixed selling and administrative expense Net income $ 381,625 134,375 12,900 234, 350 52,000 85,000 $ 97,350 1. Prepare this company's income statement for its first month of operations under absorption costing. 2. Fill in the blanks: Required 1 Required 2 Prepare an income statement for the current year under absorption costing. KENZI KAYAKING Absorption Costing Income Statement Net income (loss) Fixed costs added to inventory Required 1 Required 2 Fill in the blanks: The dollar difference in variable costing income and absorption costing income = units fixed overhead per unit.