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 $45 per unit) Cost of goods sold 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 Gross margin Selling and administrative expenses Net income 2,500,000 2,500,000 500,000 2,000,000 1.600.000 490,000 $1,110,000 Additional Information a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $175 per unit in variable selling and administrative expenses. b. The company's product cost of $25 per unit is computed as follows. Direct materials $ 4 per unit Direct labor $11 per unit S3 per Variable overhead Fixed overhead ($700,000 / 100,000 units) unit per unit Required: 1. Prepare an income statement for the company under variable costing. TREZ Company Variable Costing Income Statement Net Income (loss)