Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended July 31, Head Gear Inc. manufactured 27,300 hats, of which 25,900 were sold. Operating data for the month are summarized as follows: Sales Manufacturing costs $176,120 Direct materials $106,470 Direct labor 27,300 Variable manufacturing cost 13,650 Fixed manufacturing cost 10,920 158,340 Selling and administrative expenses: Variable $7,770 Fixed 5,670 13,440 During August, Head Gear Inc. manufactured 24,500 hats and sold 25,900 hats. Operating data for August are summarized as follows: Sales Manufacturing costs: $176,120 Direct materials Direct labor $95,550 24,500 Variable manufacturing cost 12,250 Fixed manufacturing cost 10,920 143,220