Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended July 31, Head Gear Inc. manufactured 28,600 hats, of which 26,600 were sold. Operating data for the month are summarized as follows: Sales Manufacturing costs $191,520 Direct materials Direct labor Variable manufacturing cost Fixed manufacturing cost $117,260 31,460 14,300 11,440 174,460 Selling and administrative expenses: Variable $10,640 Fixed 7,770 18,410 During August, Head Gear Inc. manufactured 24,600 designer hats and sold 26,600 hats. Operating data for August are summarized as follows: Sales Manufacturing costs $191,520 Direct materials Direct labor Variable manufacturing cost Fixed manufacturing cost $100,860 27,060 12,300 11,440 151,660 Fixed manufacturing cost 11,440 151,660 Selling and administrative expenses: Variable $10,640 Fixed 7,770 18,410 Required: 1a. Prepare an income statement for July using the absorption costing concept. Enter all amounts as positive numbers Head Gear Inc. Absorption Costing Income Statement For the Month Ended July 31 Cost of goods sold: 1b. Prepare an income statement for August using the absorption costing concept. Enter all amounts as positive numbers 1b. Prepare an income statement for August using the absorption costing concept. Enter all amounts as positive numbers Head Gear Inc. Absorption Costing Income Statement For the Month Ended August 31 Cost of goods sold 2a. Prepare an income statement for July using the variable costing concept. Enter all amounts as positive numbers Head Gear Inc. Variable Costing Income Statement For the Month Ended July 31 Variable cost of goods sold Head Gear Inc. Variable Costing Income Statement For the Month Ended July 31 Variable cost of goods sold Fixed costs: 2b. Prepare an income statement for August using the variable costing concept. Enter all amounts as positive numbers Head Gear Inc. Variable Costing Income Statement . Prepare an ncome statement ror August using the va n a Dle costing concept. nteall amounts as positive numb Head Gear Inc. Variable Costing Income Statement For the Month Ended August 31 Variable cost of goods sold: Fixed costs: 3a. For July, income from operations reported under manufacturing costs that are expensed costing is less than costing due to part of 3a. For July, income from operations reported under manufacturing costs that are expensed. costing is less than costing due to part of 3b. when large changes in inventory levels uccur from une period to the next, it is possible for management to misinterpret such increases or decreases in income from operations as due to changes in: a. costs b. prices. c. sales volume. d. "sales volume", "prices" and "costs" are correct. e. None of these choices is correct. The correct answer is: 4. Based on your answers to (1) and (2), did Head Gear Inc. operate more profitably in July or in August? Explain under the variable costing concept. The difference in income reported under the absorption costing concept is due to Head Gear Inc. wasYu allocating to the