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) $ 886,875 Cost of goods sold (825 $425) 350,625 Gross margin 536,250 Selling and administrative expenses 220,000 Net income $ 316,250 Additional Information 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. 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:

Prepare an income statement for the current year under variable costing. $ 886,875 KENZI KAYAKING Variable Costing Income Statement Sales Less: Variable costs Variable product costs Variable selling and administrative expenses $ 247,500 85,000 332,500 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.