I'm not sure what to put in the 2 blanks below "less: variable expenses". I tried adding direct materials ($931,000) and direct labor ($1,127,000) and was marked incorrect.

5 Exercise 6-9 (Algo) Absorption costing and variable costing income statements LO P2 Rey Company's only product sells for $234 per unit. Data for its first year of operations follow. 2.85 points eBook Direct materials Direct labor Variable overhead Fixed overhead Variable selling and administrative expenses Fixed selling and administrative expenses Units produced and sold $ 38 per unit $ 46 per unit $ 6 per unit $ 196,000 per year $ 36 per unit $ 236,000 per year 24,500 units Print References 1. Prepare an income statement for the year using absorption costing 2. Prepare an income statement for the year using variable costing. Prepare an income statement for the year using variable costing. REY COMPANY Income Statement (Variable Costing) $ 5,733,000 Sales Less: Variable expenses 0 2,646,000 Variable selling and administrative expenses Contribution margin Less: Fixed expenses Fixed overhead Fixed selling and administrative expenses 196,000 236,000 432,000 2,214,000 Income $