Absorption and Variable Costing Income Statements for Two Months and Analysis

During the first month of operations ended July 31, Head Gear Inc. manufactured 24,600 hats, of which 22,900 were sold. Operating data for the month are summarized as follows:

Line Item Description	Amount	Amount
Sales		$196,940
Manufacturing costs:
Direct materials	$120,540
Direct labor	31,980
Variable manufacturing cost	14,760
Fixed manufacturing cost	12,300	179,580
Selling and administrative expenses:
Variable	$9,160
Fixed	6,690	15,850