Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,000 kayaks and sold 750 at a price of $1,000 each. At this first year-end, the company reported the following income statement information using absorption costing.

Additional Information

1. Product cost per kayak totals $475, which consists of $375 in variable production cost and $100 in fixed production costthe latter amount is based on $100,000 of fixed production costs allocated to the 1,000 kayaks produced.
2. The $230,000 in selling and administrative expense consists of $85,000 that is variable and $145,000 that is fixed.

Required: 1. Prepare an income statement for the current year under variable costing. 2. Fill in the blanks:

Sales (750 x $1,000) Cost of goods sold (750 x $475) Gross margin Selling and administrative expenses Net income 750,000 356,250 393,750 230,000 163,750 KENZI KAYAKING Variable Costing Income Statement Net income (loss) Required 1 Required 2 Fill in the blanks: The dollar difference in variable costing income and absorption costing income = The dollar diference in variable costing income and absorption costing income = lunits a units fixed overhead per unit . fixed overhead per unit