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...

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Extracted text: 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 (225 x $1,600) Variable product cost (225 Variable selling and administrative expenses ( 225 x $65) Contribution margin $ 360,000 140,625 $625) 14,625 204,750 Fixed overhead cost 56,250 75,000 $ 73,500 Fixed selling and administrative expense Net income 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 this company's income statement for its first month of operations under absorption costing. HAYEK BIKES


Extracted text: Required 1 Required 2 Prepare this company's income statement for its first month of operations under absorption costing. HAYEK BIKES Absorption Costing Income Statement Sales $ 360,000 Less: Cost of goods sold Variable product costs $ 140,625 Fixed overhead costs Cost of goods sold Gross margin 140,625 Selling general and administrative expenses Variable selling and administrative expenses 14,625 Fixed selling and administrative costs 75,000 Total selling general and administrative expenses 89,625 Net income (loss) Net income under absorption costing is higher than net income under variable costing by: 89,625 Number of units added to(subtracted from) inventory %24