2 part 4 Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. Theabsorption costing income statement for this year follows.Income Statement (Absorption Costing)Sales (80,000 units × $50 per unit)Cost of goods soldGross profitSelling and administrative expensesIncomeAdditional Informationa. Selling and administrative expenses consist of $400,000 in annual fixed expenses and $2 per unit in variable selling andadministrative expenses.b. The company's product cost of $30 per unit consists of the following.Direct materialsDirect laborVariable overheadFixed overhead ($600,000 / 100,000 units)$ 4,000,0002,400,0001,600,000560, 000$ 1,040,000Required:Prepare an income statement for the company under variable costing.SalesLess: Variable expensesVariable cost of goods soldVariable selling and administrative expensesTotal variable costsContribution marginLess: Fixed expensesFixed overheadFixed selling and administrative costsTotal fixed expensesIncome$ 3 per unit$ 18 per unit$ 3 per unit$6 per unitAnswer is complete but not entirely correct.TREZ CompanyIncome Statement (Variable Costing)$2,080,000 X160,000✔$ 600,000400,000$4,000,0002,240,0001,920,0001,000,000$ 920,000

Answer : Calculation of direct material cost = 80,000*$3 = $240,000 Calculation of direct labor cost…

Trez Company began operations this year. During this year, the c absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units x $50 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income $4,000,0 2,400, BE 1,600,0 560, 0 $1,040, 06