7 3 points Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,025 kayaks and sold 775 at a price of $1,025 each. At year-end, the company reported the following income statement information using absorption costing. Sales (775 x $1,025) Cost of goods sold (775 x $450) Gross profit Selling and administrative expenses Income $ 794,375 348,750 445,625 240,000 $ 205,625 eBook Hint Print Additional Information a. Product cost per kayak under absorption costing totals $450, which consists of $350 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $102,500 of fixed overhead per year divided by 1,025 kayaks produced. b. The $240,000 in selling and administrative expenses consists of $95,000 that is variable and $145,000 that is fixed. Prepare an income statement for the current year under variable costing. KENZI References Income Statement (Variable Costing) Sales Less: Variable expenses Variable cost of goods sold $ 271,250 Variable selling and administrative expenses Contribution margin Less: Fixed expenses Fixed selling and administrative expenses Fixed overhead Income $ 794,375 271,250