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. $3,200,000 Sales (80,000 units X $40 per unit) Cost of goods sold Beginning inventory Cost of goods manufactured (100,000 units X $20 per unit) Cost of good available for sale Ending inventory (20,000 $20) Cost of goods sold Gross margin Selling and administrative expenses Net income $ 0 2,000,000 2,000,000 400,000 1,600,000 1,600,000 490,000 $1,110,000 Additional Information a. Selling and administrative expenses consist of $350,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses. b. The company's product cost of $20 per unit is computed as follows. Direct materials Direct labor Variable overhead Fixed overhead ($700,000 / 100,000 units) $5 per unit $6 per unit $2 per unit $ 7 per unit Required: 1. Prepare an income statement for the company under variable costing. TREZ Company Variable Costing Income Statement Net income (loss)