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 * $1,800) Variable product cost (215 x $650) Variable selling and administrative expenses (215 * $50) Contribution margin Fixed overhead cost Fixed selling and administrative expense Net income $ 387,000 139,750 10, 750 236,500 61,750 75,000 $ 99,750 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 Sales | $ 387,000 Less: Cost of goods sold Fixed overhead costs Variable product costs 139,750 139,750 Cost of goods sold Gross margin Selling general and administrative expenses Fixed selling and administrative costs Variable selling and administrative expenses 75,000 10,750 85,750 Total selling general and administrative expenses Net income (loss) Net income under absorption costing is higher than net income under variable costing by: Fixed costs added to inventory Required 1 Required 2 > Required a Required 1 Required 2 required 2 | Fill in the blanks: The dollar difference in variable costing income and absorption costing income = units fixed overhead per unit.