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 Cost of goods sold $45 per unit) 3,600,000 Beginning inventory Cost of goods manufactured (100,000 units $25 per unit) 2,500,000 Cost of good available for sale Ending inventory (20,000 x $25) 2,500,000 500,000 Cost of goods sold 2,000,000 Gross margin Selling and administrative expenses 1,600,000 490,000 Net income $ 1,110,000 Additional Information a. Selling and administrative expenses consist of S350,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses b. The company's product cost of $25 per unit is computed as follows Direct materials Direct laor Variable overhead Fixed overhead ($900,000/100,000 units) 9 per unit S 3 per unit $ 11 per unit S 2 per unit Required 1. Prepare an income statement for the company under variable costing TREZ Company Variable Costing Income Statement