Absorption and Variable Casting Income Statements for Two Months and Analysis During the first month of operations ended July 31, Head Gear Inc. manufactured 6,400 hats, of which 5,200 were sold. Operating data for the month are summarized as follows: Sales Manufacturing costs: $104,000 Direct materials $47,360 Direct labor 22,400 Variable manufacturing cost 12,160 Fixed manufacturing cost 15,360 97,280 Selling and administrative expenses: Variable $10,9201 Fixed 5,200 16,120 During August, Head Gear Inc. manufactured 4,000 hats and sold 5,200 hats. Operating data for August are summarized as follows: Sales Manufacturing costs: $104,000 Direct materials $29,600 Direct labor 14,000 Variable manufacturing cost 7,600 Fixed manufacturing cost 15,360 66,560 Selling and administrative expenses: Variable $10,920 Fixed 5,200 16,120