Absorption and Variable Costing Income Statements

During the first month of operations ended July $31,$ YoSan Inc. manufactured $10,500$ flat panel televisions, of which $9,700$ were sold. Operating data for the month are summarized as follows:

Line Item Description Amount Amount

Sales $$1,697,500$

Manufacturing costs:

Direct materials $$861,000$

Direct labor $262,500$

Variable manufacturing cost $220,500$

Fixed manufacturing cost $115,5001,459,500$

Selling and administrative expenses:

Variable $$135,800$

Fixed $62,500198,300$

Required:

Question Content Area

$1.$ Prepare an income statement based on the absorption costing concept.

YoSan Inc.

Absorption Costing Income Statement

For the Month Ended July $31$

Line Item Description Amount Amount

$$-$ Select $-$

Cost of goods sold:

$$-$ Select $-$

$-$ Select $-$

$-$ Select $-$

$$-$ Select $-$

$-$ Select $-$

$$-$ Select $-$

Question Content Area

$2.$ Prepare an income statement based on the variable costing concept.

YoSan Inc.

Variable Costing Income Statement

For the Month Ended July $31$

Line Item Description Amount Amount

$$-$ Select $-$

Variable cost of goods sold:

$$-$ Select $-$

$-$ Select $-$

$-$ Select $-$

$$-$ Select $-$

$-$ Select $-$

$$-$ Select $-$

Fixed costs:

$$-$ Select $-$

$-$ Select $-$

blank

blank $-$ Select $-$

$$-$ Select $-$

Question Content Area

$3.$ Explain the reason for the difference in the amount of operating income reported in $(1)$ and $(2).$

The operating income reported under fill in the blank $1$ of $4$

costing exceeds the operating income reported under fill in the blank $2$ of $4$

costing, due to fill in the blank $3$ of $4$

manufacturing costs that are deferred to a future month under fill in the blank $4$ of $4$

costing.