Absorption and Variable Costing Income Statements

During the first month of operations ended July 31, YoSan Inc. manufactured 12,500 flat panel televisions, of which 11,800 were sold. Operating data for the month are summarized as follows:

Sales		$2,006,000
Manufacturing costs:
Direct materials	$1,000,000
Direct labor	300,000
Variable manufacturing cost	250,000
Fixed manufacturing cost	125,000	1,675,000
Selling and administrative expenses:
Variable	$165,200
Fixed	76,000	241,200

Required:

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

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

YoSan Inc. Absorption Costing Income Statement For the Month Ended July 31 Sales 2,006,000 Cost of goods sold: Cost of goods manufactured Inventory, July 31 Total cost of goods sold Gross profit Selling and administrative expenses Ill. Operating income Variable Costing Income Statement For the Month Ended July 31 Sales 2,006,000 Variable cost of goods sold: Variable cost of goods manufactured Inventory, July 31 Total variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs $ Fixed selling and administrative expenses Total fixed costs