Exercise 4-2 (Algo) Variable Costing Income Statement; Explanation of Difference in Net Operating Income [LO4-2] Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $980. Selected data for the companys operations last year follow: Units in beginning inventory 0 Units produced 280 Units sold 265 Units in ending inventory 15 Variable costs per unit: Direct materials $ 150 Direct labor $ 370 Variable manufacturing overhead $ 45 Variable selling and administrative $ 30 Fixed costs: Fixed manufacturing overhead $ 70,000 Fixed selling and administrative $ 30,000 The absorption costing income statement prepared by the companys accountant for last year appears below: Sales $ 259,700 Cost of goods sold 215,975 Gross margin 43,725 Selling and administrative expense 37,950 Net operating income $ 5,775 Required:

Prepare an income statement for last year using variable costing.