Absorption and Variable Costing Income Statements

During the first month of operations ended July 31, YoSan Inc. manufactured 9,200 flat panel televisions, of which 8,600 were sold. Operating data for the month are summarized as follows:

Line Item Description	Amount	Amount
Sales		$1,505,000
Manufacturing costs:
Direct materials	$754,400
Direct labor	230,000
Variable manufacturing cost	193,200
Fixed manufacturing cost	101,200	1,278,800
Selling and administrative expenses:
Variable	$120,400
Fixed	55,400	175,800

Required:

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

Line Item Description	Amount	Amount
		$- Select -
Cost of goods sold:
	$- Select -
	- Select -
		- Select -
		$- Select -
		- Select -
		$- Select -

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

Line Item Description	Amount	Amount
		$
Variable cost of goods sold:
	$
	$
		$
		$
Fixed costs:
	$
		$

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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

absorptionvariable

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

absorptionvariable

costing, due to fill in the blank 3 of 4

fixedvariable

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

absorptionvariable

costing.