Trez Company began operations this year. During this year, the company produced $100,000$ units and sold $80,000$ units. The absorption costing income statement for this year follows.

Income Statement $($Absorption Costing$)$

Sales $(80,000$ units $\backslash$times $$50$ per unit$)$ $ $4,000,000$

Cost of goods sold $2,400,000$

Gross profit $1,600,000$

Selling and administrative expenses $530,000$

Income $ $1,070,000$

Additional Information

Selling and administrative expenses consist of $$350,000$ in annual fixed expenses and $$2\mathrm{.}25$ per unit in variable selling and administrative expenses.

The company's product cost of $$30$ per unit consists of the following.

Direct materials $ $5$ per unit

Direct labor $ $14$ per unit

Variable overhead $ $2$ per unit

Fixed overhead $($$$900,000/100,000$ units$)$ $ $9$ per unit

Required:

Prepare an income statement for the company under variable cosTREZ Company

Income Statement $($Variable Costing$)$

Sales $$4,000,000$

Less: Variable expenses

Variable selling and administrative expenses

Contribution margin

Less: Fixed expenses

Fixed overhead $$900,000$

$350,000$

Income $$890,000$ting.