Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,025 kayaks and sold 775 at a price of $1,025 each. At year-end, the company reported the following income statement Information using absorption costing. Sales (775x $1,025) Cost of goods sold (775 x $475) Gross profit Selling and administrative expenses Income Additional Information $ 794,375 368,125 426,250 240,000 $ 186,250 a. Product cost per kayak under absorption costing totals $475, which consists of $375 in direct materials, direct labor, and variable overhead costs and $100 In fixed overhead cost. Fixed overhead of $100 per unit is based on $102,500 of fixed overhead per year divided by 1,025 kayaks produced. b. The $240,000 in selling and administrative expenses consists of $105,000 that is variable and $135,000 that is fixed. Prepare an income statement for the current year under variable costing. KENZI Income Statement (Variable Costing) Sales S 794,375 Less: Variable expenses Variable cost of goods sold Variable selling and administrative expenses Contribution margin Less: Fixed expenses Fixed selling and administrative expenses Fixed overhead Income