ces Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units $40 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income Additional Information $ 3,200,000 1,600,000 1,600,000 540,000 $ 1,060,000 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 $20 per unit consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($600,000 / 100,000 units) Required: $5 per unit $ 6 per unit $3 per unit $6 per unit Prepare an income statement for the company under variable costing.