Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 5,600 rackets and sold 4,500. Each racket was sold at a price of $86. Fixed overhead costs are $70,560, and fixed selling and administrative costs are $64,800. The company also reports the following per unit costs for the year:

Variable production costs	$	24.60
Variable selling and administrative expenses	$	1.60

Required: Prepare an income statement under variable costing.

ACES INC Variable Costing Income Statement Sales $ 387,000 Less: Variable costs Variable production costs Variable selling and administrative expenses Variable overhead costs $110,700 7,200 117,900 Contribution margin Fixed overhead costs $70,560 64,800 Fixed selling and administrative costs Total fixed expense Net income (loss) 135,360