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, 350 bikes were produced and 225 were sold; this left 125 bikes in ending inventory. The income statement information under variable costing follows.

Sales (225 $1,600)	$	360,000
Variable product cost (225 $625)		140,625
Variable selling and administrative expenses (225 $55)		12,375
Contribution margin		207,000
Fixed overhead cost		70,000
Fixed selling and administrative expense		85,000
Net income	$	52,000

1. Prepare this company's income statement for its first month of operations under absorption costing. (Round your intermediate calculations to the nearest whole dollar.)

HAYEK BIKES Absorption Costing Income Statement Sales $360,000 Less: Cost of goods sold Variable product costs Fixed overhead costs Cost of goods sold Gross margin Selling general and administrative expenses Fixed selling and administrative costs Variable selling and administrative expenses Net income (loss) Net income under absorption costing is higher than net income under variable costing by: Fixed costs added to inventory