Critry Mourtain Sports Ine. assembles and sells snowmobile engines. The company began operations on Masch 1 and operated at 100 s. of capsoly during the first month. The following diata summarize the resuts for March: Instructions Labels and Amo Fine Labels and Amount Descriptions Absorption Costing Income Statement Fixed costs c. W For the Month Ended March 31 March 31 Amount Descriptions Contribution margin Contribution margin ratio Cost of goods sold Fixed tactory overhead costs Fixed selling and administrative expenses Gross profit Operating income Loss from operations Manulacturing margin Planned contribution margin Sales Sales mix Selling and administrative expenses Total fixed costs Variable cost of goods sold Variable selling and administrative expenses a. Prepare an income statement according to the absorption costing concept. Income Statement instructions c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)? Check aif phat apaly. Under absorption costing, when imventory increases, the income statement will have a highet Operating income than will the variable costng income statement. Under varinble costing, the units that were produced but unsold include fixed factory overnead cost, which is not included in cost of goods sold. There is no difference; the Operiting income reported in (a) and (b) is the saine: Under variable costing, ail of the foxed factory overhead cost is desucted in the period in which it is incurred, tegardess of the amount of imentory charge. Under absorption costing. When inventory increases, the income statement wit have a lower Operating income than will the variable cocting income stajement. Variable Costing Income Statement Income. Statement Insinuctions Crazy Mountain Sports Inc. Variable Costing Income Statement