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. $3,600,000 Sales (80,000 units x $45 per unit) Cost of goods sold Beginning inventory Cost of goods manufactured (100,000 units x $25 per unit) Cost of goods available for sale Ending inventory (20,000 $25) Cost of goods sold Gross margin Selling and administrative expenses Net income 0 2,500,000 2,500,000 500,000 2,000,000 1,600,000 610,000 $ 990,000 Additional Information a. Selling and administrative expenses consist of $450,000 in annual fixed expenses and $2 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 labor Variable overhead Fixed overhead ($800,000 / 100,000 units) $5 per unit $9 per unit $3 per unit $8 per unit Required: 1. Prepare an income statement for the company under variable costing. 2. Fill in the blanks. Required 1 Required 2 Prepare an income statement for the company under variable costing. TREZ Company Variable Costing Income Statement Sales $ 3,600,000 Less: Variable costs Direct materials 320,000 Direct labor 960,000 160,000 Variable overhead Variable selling and administrative expenses 140,000 Total variable costs 1,580,000 2,020,000 Contribution margin Less: Fixed expenses Fixed overhead 700,000 400,000 Fixed selling and administrative costs Total fixed expenses Net income (loss) 1,100,000 $ 920,000 Required: 1. Prepare an income statement for the company under variable costing. 2. Fill in the blanks. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Fill in the blanks. The dollar difference in variable costing income and absorption costing income = units fixed overhead per unit.