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, 400 bikes were produced and 240 were sold; this left 160 bikes in ending inventory. the income statement information under variable costing follows.

sales (240 × $1,650) $ 396,000
variable product cost (240 × $650) 156,000
variable selling and administrative expenses (240 × $55) 13,200
contribution margin 226,800
fixed overhead cost 72,000
fixed selling and administrative expense 85,000
net income $ 69,800