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Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. $4,00 6 Sales (80,000 units x $50 per unit) Cost of goods sold Beginning inventory...... Cost of goods manufactured (100,000 units x $30 per unit). Cost of goods available for sale Ending inventory (20,000 x $30) Cost of goods sold Gross margin..... Selling and administrative expenses Net income 0 3,000,000 3,000,000 600,000 2,400,000 1,600,000 530,000 $1,070,000 Additional Information a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $2.25 per unit in variable selling and administrative expenses. b. The company's product cost of $30 per unit is computed as follows. Direct materials Direct labor Variable overhead Fixed overhead ($900,000/100,000 units). $5 per unit $14 per unit $2 per unit $9 per unit Required 1. Prepare an income statement for the company under variable costing. Check (1) Variable costing income, $890,000 2. Explain any difference between the income under variable costing (from part 1) and the income reported above. Part 1 TREZ COMPANY Variable Costing Income Statement Sales ......... . Variable expenses Variable product costs.......... Variable sell. & adm. expenses Total variable expenses.......... Contribution margin........ Fixed expenses Fixed manufacturing costs..... Fixed selling & administrative expenses.... Total fixed expenses.. Net income..... Part 2 Type answer here