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Councy Mocons cessen $2.550,000 Sales (17,000 units) Production costs (22,000 units): Direct materials $1,221,000 Direct labor 585,200 Variable factory overhead 292,600 Fixed factory overhead 195,800

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Councy Mocons cessen $2.550,000 Sales (17,000 units) Production costs (22,000 units): Direct materials $1,221,000 Direct labor 585,200 Variable factory overhead 292,600 Fixed factory overhead 195,800 2.294,600 Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses 5355,700 137,700 493,400 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 b. Prepare an stat accor to the variable costing concept. Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31 Fixed costs: c. What is the reason for the difference in the amount of operating income reported in (a) and (b)? Under the method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under income statement will have a higher operating income. all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the

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