Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,050 kayaks and sold 800 at a price of $1,050 each. At this first year-end, the company reported the following income statement information using absorption costing.

Sales (800 $1,050)	$	840,000
Cost of goods sold (800 $500)		400,000
Gross margin		440,000
Selling and administrative expenses		220,000
Net income	$	220,000

Additional Information

1. Product cost per kayak totals $500, which consists of $400 in variable production cost and $100 in fixed production costthe latter amount is based on $105,000 of fixed production costs allocated to the 1,050 kayaks produced.
2. The $220,000 in selling and administrative expense consists of $85,000 that is variable and $135,000 that is fixed.

Required: 1. Prepare an income statement for the current year under variable costing

KENZI KAYAKING
Variable Costing Income Statement
Net income (loss)

• Required 1

2. Fill in the blanks:

The dollar difference in variable costing income and absorption costing income =unitsfixed overhead per unit.