$3,600,000 Sales (80,000 units X $45 per unit) Cost of goods sold Beginning inventory Cost of goods manufactured (100,000 units * $25 per unit) Cost of goods available for sale Ending inventory (20,000 * $25) Cost of goods sold Gross margin Selling and administrative expenses Net income $ 2,500,000 2,500,000 500,000 2,000,000 1,600,000 540,000 $1,060,000 Additional Information a. Selling and administrative expenses consist of $400,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses. b. The company's product cost of $25 per unit is computed as follows. Direct materials Direct labor Variable overhead Fixed overhead ($800,000 / 100,000 units) $ 4 per unit $11 per unit $ 2 per unit $ 8 per unit Required: 1. Prepare an income statement for the company under variable costing. 2. Fill in the blanks. Required 1 Required 2 Prepare an income statement for the company under variable costing. TREZ Company Variable Costing Income Statement Net income (loss) 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.