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 $40 per unit)$3,200,000

Cost of goods sold

Beginning inventory$0

Cost of goods manufactured (100,000 units $20 per unit)2,000,000

Cost of goods available for sale2,000,000

Ending inventory (20,000 $20)400,000

Cost of goods sold1,600,000

Gross margin1,600,000

Selling and administrative expenses590,000

Net income$1,010,000

- selling and admin expenses consist of $450,00 in annual fixed expenses and $1.75 per unit in variable selling and admin. expenses.

-the company's product cost of $20 per unit is

Direct materials$4per unit

Direct labor$5per unit

Variable overhead$3per unit

Fixed overhead ($800,000 / 100,000 units)$8per unit

1- make an income statement for the company under variable costing.

2-Fill in the blanks. "the dollar difference in variable costing income and absorption costing income = ____units X $8 fixed overhead per unit