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Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares the income statement under absorption costing for external reporting. For its first month of operations, 425 bikes were produced and 255 were sold; this left 170 bikes in ending inventory. The income statement information under variable costing follows. Sales (255 * $1,725) Variable product cost (255 * $625) Variable selling and administrative expenses (255 * $ 70) Contribution margin Fixed overhead cost Fixed selling and administrative expense Net income $ 439,875 159,375 17,850 262,650 72,250 95,000 $ 95,400 1. Prepare this company's income statement for its first month of operations under absorption costing. 2. Fill in the blanks: Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for the current year under absorption costing. KENZI KAYAKING Absorption Costing Income Statement Sales $ 439,875 Less: Cost of goods sold Variable product costs Fixed overhead costs $ 159,375 43,350 Cost of goods sold Gross margin 202,725 237,150 $ Variable selling and administrative expenses Fixed selling and administrative costs 17,850 95,000 112,850 Total selling general and administrative expenses Net income (loss) Net income under absorption costing is higher than net income under variable costing by: Fixed costs added to inventory Required 1 Required 2 > Required 1 Required 2 Fill in the blanks: The dollar difference in variable costing income and absorption costing income = units fixed overhead per unit.