Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended July 31, Head Gear Inc. manufactured 33,400 hats, of which 31,400 were sold. Operating data for the month are summarized as follows Sales Manufacturing costs $282,600 $170,340 Direct materials Direct labor Variable manufacturing cost Fixed manufacturing cost 43,420 20,040 16,700 250,500 Selling and administrative expenses: Variable $15,700 Fixed 11,460 27,160 During August, Head Gear Inc. manufactured 29,400 designer hats and sold 31,400 hats. Operating data for August are summarized as follows: Sales Manufacturing costs $282,600 Direct materials Direct labor Variable manufacturing cost Fixed manufacturing cost $149,940 38,220 17,640 16,700 222,500 Selling and administrative expenses: Variable $15,700 Fixed 11,460 27,160