Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,100 kayaks and sold 850. at a price of $1,100 each. At this first year-end, the company reported the following income statement information using absorption costing Sales (850 x $1,100) Cost of goods sold (850 x $500) $ 935,000 425,000 Gross margin Selling and administrative expenses 510,000 210,000 Net income 300,000 Additional Information a. Production cost per kayak totals $500, which consists of $400 in variable production cost and $100 in fixed production cost-the latter amount is based on $110,000 of fixed production costs allocated to the 1,100 kayaks produced b. The $210,000 in selling and administrative expense consists of $85,000 that is variable and $125,000 that is fixed Required 1. Prepare an income statement for the current year under variable costing KENZI KAYAKING Variable Costing Income Statement ales ess: Variable costs Variable production costs Variable seling and administrative expenses otal variable costs Contribution margin ess: Fixed expenses Fixed overhead costs Fixed selling and administrative costs Net income (loss) et income under absorption costing is higher than net income under variable costing by Fixed costs added to inventory