Reference no: EM132050337

Question - 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 × $1,675) $ 376,875

Variable production cost (225 × $600) 135,000

Variable selling and administrative expenses (225 × $50) 11,250

Contribution margin 230,625

Fixed overhead cost 60,000

Fixed selling and administrative expense 80,000

Net income $ 90,625

Prepare this company's income statement for its first month of operations under absorption costing.