Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,075 kayaks and sold 825. at a price of $1,075 each. At this first year-end, the company reported the following income statement information using absorption costing. Sales (825 x $1,075) Cost of goods sold (825 x $450) Gross margin selling and administrative expenses Net income $ 886,875 371,250 515,625 240,000 $ 275,625 Additional Information a. Product cost per kayak totals $450, which consists of $350 in variable production cost and $100 in b. The $240,000 in selling and administrative expense consists of $105,000 that is variable and fixed production cost-the latter amount is based on $107,500 of fixed production costs allocated to the 1,075 kayaks produced. $135,000 that is fixed. Required 1. Prepare an income statement for the current year under variable costing KENZI KAYAKING Variable Costing Income Statement $ 886,875 Sales Less: Variable costs Variable product costs 288,750 Variable selling and administrative expenses 105,000 Total variable costs Contribution margin Less: Fixed expenses 393,750 493,125 Fixed selling and administrative costs 135,000 107,500 Fixed overhead costs 242,500 $250,625 Total fixed expenses Net income (loss) 87 Net income under absorption costing is higher than net income under variable costing by: Number of units added to(subtracted from) inventory Fixed overhead cost per unit Fixed costs added to inventory 87