Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended July 31, Head Gear Inc. manufactured 21,200 hats, of which 20,100 were sold. Operating data for the month are summarized as follows Sales Manufacturing costs $168,840 Direct materials Direct labor Variable manufacturing cost Fixed manufacturing cost $101,760 27,560 12,720 10,600 152,640 Selling and administrative expenses Variable $8,040 Fixed 5,870 13,910 During August, Head Gear Inc. manufactured 19,000 designer hats and sold 20,100 hats. Operating data for August are summarized as follows Sales Manufacturing costs $168,840 Direct materials Direct labor Variable manufacturing cost Fixed manufacturing cost 91,200 24,700 11,400 10,600 137,900