What Is: The Net Income under Absorption Costing is Higher than Net Income under Variable Costing by? What Is: Fixed costs added to inventory? 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, 375 bikes were produced and 225 were sold; this left 150 bikes in ending inventory. The income statement information under variable costing follows

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, 375 bikes were produced and 225 were sold, this left 150 bikes in ending inventory. The income statement information under variable costing follows Sales (225x $1,600) Variable production cost (225x $625) Variable selling and administrative expenses (225 $ 360,000 140,625 14,625 $65) Contribution margin Fixed overhead cost Fixed selling and administrative expense 204,750 56,250 75,000 Net income $ 73,500 1. Prepare this company's income statement for its first month of operations under absorption costing