Absorption and Variable Costing Income Statements

During the first month of operations ended July 31, YoSan Inc. manufactured 8,500 flat panel televisions, of which 7,900 were sold. Operating data for the month are summarized as follows:

Sales		$1,264,000
Manufacturing costs:
Direct materials	$637,500
Direct labor	187,000
Variable manufacturing cost	161,500
Fixed manufacturing cost	85,000	1,071,000
Selling and administrative expenses:
Variable	$102,700
Fixed	47,200	149,900

Required:

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

YoSan Inc.
Absorption Costing Income Statement
For the Month Ended July 31
		$
Cost of goods sold:
	$
		$
		$

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

YoSan Inc.
Variable Costing Income Statement
For the Month Ended July 31
		$
Variable cost of goods sold:
	$
		$
		$
Fixed costs:
	$
		$

3. The income from operations reported under costing exceeds the income from operations reported under costing by the difference between the two, due to manufacturing costs that are deferred to a future month under costing.