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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.

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, 375 bikes were produced and 225 were sold; this left 150 bikes in ending inventory. The income statement information under variable costing follows.

Sales (225 $1,625) $ 365,625
Variable product cost (225 $675) 151,875
Variable selling and administrative expenses (225 $60) 13,500
Contribution margin 200,250
Fixed overhead cost 71,250
Fixed selling and administrative expense 80,000
Net income $ 49,000

1. Prepare this company's income statement for its first month of operations under absorption costing. (Round your intermediate calculations to the nearest whole dollar.)

HAYEK BIKES
Absorption Costing Income Statement
Sales $365,625
Less: Cost of goods sold
Variable product costs $151,875
Fixed overhead costs 42,750
Cost of goods sold 194,625
Gross margin 171,000
Selling general and administrative expenses
Variable selling and administrative expenses 13,500
Fixed selling and administrative costs 80,000
Total selling general and administrative expenses 93,500
Net income (loss) $77,500
Net income under absorption costing is higher than net income under variable costing by: $28,500
Number of units added to(subtracted from) inventory
Fixed costs added to inventory

*Please advise that under 'Number of units added (subtracted from inventory), there is another box where another amount is before getting the final answer to fixed costs added to inventory.

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