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Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended July 31 , Head Gear Inc. manufactured
Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended July 31 , Head Gear Inc. manufactured 21,100 hats, of which 20,000 were sold. Operating data for the month are summarized as follows: 1a. Prepare income statement for July using the absorption costing concept. 1b. Prepare income statement for August using the absorption costing cancept. 2a. Prepare income statement for July using the variable costing concept. 2b. Prepare income statement for August using the variable costing concept. 3a. For July, operating income reported under costing is less than costing due to part of manufacturing costs that are expensed. a. costs. b. prices. c. sales volume. d. "sales volume", "prices" and "costs" are correct. e. None of these choices is correct. The correct answer is: 4. Based on your answers to (1) and (2), did Head Gear Inc. operate more profitably in July or in August? Explain. Head Gear Inc. was under the variable costing concept. The difference in operating income reported under the absorption costing concept is due to allocating to the Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended July 31 , Head Gear Inc. manufactured 21,100 hats, of which 20,000 were sold. Operating data for the month are summarized as follows: 1a. Prepare income statement for July using the absorption costing concept. 1b. Prepare income statement for August using the absorption costing cancept. 2a. Prepare income statement for July using the variable costing concept. 2b. Prepare income statement for August using the variable costing concept. 3a. For July, operating income reported under costing is less than costing due to part of manufacturing costs that are expensed. a. costs. b. prices. c. sales volume. d. "sales volume", "prices" and "costs" are correct. e. None of these choices is correct. The correct answer is: 4. Based on your answers to (1) and (2), did Head Gear Inc. operate more profitably in July or in August? Explain. Head Gear Inc. was under the variable costing concept. The difference in operating income reported under the absorption costing concept is due to allocating to the
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