Problem 19-2A Variable costing income statement and conversion to absorption costing income LO P2, P3 Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Sales (80,000 units x $40 per unit) Cost of goods sold $3,200,000 Beginning inventory Cost of goods manufactured (100,000 units x $20 per unit) Cost of good available for sale Ending inventory (20,000 $20) Cost of goods sold 2,000,000 2,000,000 400,000 Gross margin Selling and administrative expenses Net income 1,600,000 1,600,000 530,000 $1,070,000 Additionel Informetion a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $2.25 per unit in variable selling and administrative expenses b. The company's product cost of $20 per unit is computed as follows Direct materials Direct labor Variable overhead Fixed overhead ($700,000 100,000 units) $3 per unit $8 per unit $2 per unit $7 per unit Required 1. Prepare an income statement for the company under variable costing