Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares the income statement under absorption costing for external reporting. For its first month of operations, 350 bikes were produced and 225 were sold; this left 125 bikes in ending inventory. The income statement information under variable costing follows.

Sales (225 $1,800)	$	405,000
Variable product cost (225 $625)		140,625
Variable selling and administrative expenses (225 $55)		12,375
Contribution margin		252,000
Fixed overhead cost		66,500
Fixed selling and administrative expense		90,000
Net income	$	95,500

1. Prepare this company's income statement for its first month of operations under absorption costing. 2. Fill in the blanks:

KENZI KAYAKING Absorption Costing Income Statement Net income (loss) Fixed costs added to inventory The dollar difference in variable costing income and absorption costing income units fixed overhead per unit