20)

Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,000 kayaks and sold 750. at a price of $1,000 each. At this first year-end, the company reported the following income statement information using absorption costing.

Sales (750 $1,000)	$	750,000
Cost of goods sold (750 $450)		337,500
Gross margin		412,500
Selling and administrative expenses		240,000
Net income	$	172,500

Additional Information

a.	Production cost per kayak totals $450, which consists of $350 in variable production cost and $100 in fixed production costthe latter amount is based on $100,000 of fixed production costs allocated to the 1,000 kayaks produced.
b.	The $240,000 in selling and administrative expense consists of $95,000 that is variable and $145,000 that is fixed.

Required

1.	Prepare an income statement for the current year under variable costing.