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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

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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 22,500 hats, of which 21,200 were sold. Operating data for the month are summarized as follows: Sales Manufacturing costs: $169,600 Direct materials $103,500 Direct labor 27,000 Variable manufacturing cost 13,500 Fixed manufacturing cost 11,250 155,250 Selling and administrative expenses: Variable Fixed $8,480 6,190 14,670 During August, Head Gear Inc. manufactured 19,900 hats and sold 21,200 hats. Operating data for August are summarized as follows: Sales Manufacturing costs: $169,600 Direct materials $91,540 Direct labor 23,880 Variable manufacturing cost 11,940 Fixed manufacturing cost 11,250 138,610 Selling and administrative expenses:

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