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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 28,200 hats, of which 26,800 were sold. Operating data for the month are summarized as follows: Sales $235,840 During August, Head Gear Inc. manufactured 25,400 designer hats and sold 26,800 hats. Operating data for August are summarized as follows: Sales $235,840 1a. Prepare an income statement for July using the absorption costing concept. Enter all amounts as positive numbers. 1a. Prepare an income statement for July using the absorption costing concept. Enter all amounts as positive number 1b. Prepare an income statement for. August using the absomtion costing concept Enter all amounts as positive numbe 2a. Prepare an income statement for July using the variable costing concept. Enter all amounts as positive numbers. 2b. Prepare an income statement for August using the variable costing concept. Enter all amounts as positive numbers. 2b. Prepare an income statement for August using the variable costing concept. Enter all amounts as positive numbers. 3a. For July, income from operations 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 income reported under the absorption costing concept is due to allocating 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 income reported under the absorption costing concept is due to allocating to the
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