Absorption and Variable Costing Income Statements During the first month of operations ended July 31, YoSan Inc. manufactured 11,000 flat panel televisions, of which 10,100 were sold. Operating data for the month are summarized as follows: $1,262,500 Sales Manufacturing costs: Direct materials Direct labor Variable manufacturing cost Fixed manufacturing cost Selling and administrative expenses: Variable Fixed $649,000 198,000 165,000 88,000 1,100,000 $101,000 46,500 147,500 Required: 1. Prepare an income statement based on the absorption costing concept. YoSan Inc. Absorption Costing Income Statement For the Month Ended July 31 Sales Cost of goods sold: 5 $ Feedback Check My Work 1. Sales - (cost of goods manufactured - ending inventory*) = Gross profit; gross profit - selling and administrative expenses = operating income *(Manufactured Units - Sold units) x (total manufacturing costs/manufactured units) 2. Prepare an income statement based on the variable costing concept. YoSan Inc. Variable Costing Income Statement For the Month Ended July 31 Sales Variable cost of goods sold: Variable cost of goods manufactured 9 Ooh Fixed costs: 3. Explain the reason for the difference in the amount of operating income reported in (1) and (2). costing, due to The operating income reported under costing exceeds the operating income reported under manufacturing costs that are deferred to a future month under costing