Production costs per unit total $14, which consists of $12.90 in variable production costs and $1.10 production costs (based on the 20,000 units produced). 60% of total selling and administrative expenses are variable. Compute net income under variable costing. Tim's Tools, a manufacturer of cordless drills, began operations this year. During this year, the comp produced 20,000 units and sold 18,000 units. At year-end the company reported the following incorrect statement using absorption costing