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		230,000
Net income	$	210,000

Additional Information

a.	Production 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.
b.	The $230,000 in selling and administrative expense consists of $75,000 that is variable and $155,000 that is fixed.

Required

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