Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,075 kayaks and sold 825 at a price of $1,075 each. At year-end, the company reported the following income statement information using absorption costing. Sales (825 $1,075) Cost of goods sold (825 $450) Gross profit Selling and administrative expenses Income $ 886,875 371,250 515,625 240,000 $ 275,625 Additional Information a. Product cost per kayak under absorption costing totals $450, which consists of $350 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $107,500 of fixed overhead per year divided by 1,075 kayaks produced. b. The $240,000 in selling and administrative expenses consists of $85,000 that is variable and $155,000 that is fixed. Prepare an income statement for the current year under variable costing. KENZI Income Statement (Variable Costing) $ 886,875 Sales Less: Variable expenses Variable cost of goods sold $ 288,750 Variable selling and administrative expenses 240,000 Variable overhead costs 528,750 Contribution margin 493,125 Less: Fixed expenses Fixed overhead 107,500 Fixed selling and administrative expenses 135,000 Income 242,500 $ 25,000