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Exercise 19-4 Variable costing income statement LO P2 Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,025 kayaks and sold 775 at a price of $1,025 each. At this first year-end, the company reported the following income statement information using absorption costing. Sales (775 X $1,025) Cost of goods sold (775 x $450) Gross margin Selling and administrative expenses Net income $ 794, 375 348,750 445,625 230,000 $ 215,625 Additional Information a. Product cost per kayak totals $450, which consists of $350 in variable production cost and $100 in fixed production cost-the latter amount is based on $102,500 of fixed production costs allocated to the 1,025 kayaks produced. b. The $230,000 in selling and administrative expense consists of $95,000 that is variable and $135,000 that is fixed. Required: 1. Prepare an income statement for the current year under variable costing. 2. Fill in the blanks: $ 794,375 KENZI KAYAKING Variable Costing Income Statement Sales Less: Variable costs Variable product costs Variable selling and administrative expenses 271,250 95,000 366,250 428,125 Total variable costs Contribution margin Less: Fixed expenses Fixed overhead costs Fixed selling and administrative costs $ 102,500 102,500 Total fixed expenses Net income (loss) ca 25,000 250 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 100 $ 25,000