Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended July 31, Head Gear Inc. manufactured 30,300 hats, of which 28,500 were sold. Operating data for the month are summarized as follows: Sales Manufacturing costs: $188,100 Direct materials $115,140 Direct labor 30,300 Variable manufacturing cost 15,150 Fixed manufacturing cost 12,120 172,710 Selling and administrative expenses: Variable $8,550 Fixed 6,240 14,790 During August, Head Gear Inc. manufactured 26,700 hats and sold 28,500 hats. Operating data for August are summarized as follows: Sales Manufacturing costs: $188,100 Direct materials $101,460 Direct labor 26,700 Variable manufacturing cost 13,350 Fixed manufacturing cost Seling and administrative expenses: 12,120) 153,630 Variable Fixed $8,550 6,240 14,790 Previne