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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

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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 $45 per unit) Cost of goods sold $3,600,000 Beginning inventory Cost of goods manufactured (100,000 units x $25 per unit) Cost of good available for sale Ending inventory (20,000 x $25) Cost of goods sold 2,500,000 2,500,000 500,000 Gross margin Selling and administrative expenses Net income 2,000,000 1,600,000 560,000 $1,040,000 Additional Information a. Selling and administrative expenses consist of $400,000 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) $ 3 per unit $12 per unit $ 2 per unit $8 per unit Required 1. Prepare an income statement for the company under variable costing TREZ Company Variable Costing Income Statement Net income (loss)

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