der absorption costing and variable costing Instructions Labels and Amount Descriptions Absorption Costing Income Statement Variable Costing Income Statement Final Question Instructions Shawnee Motors Inc assembles and sells snowmobile engines. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August 1 Sales (31,000 units) ho $7.750,000.00 1 Production costs (58.000 units): 3 Direct materials $3,040,000.00 Direct labor 1.710.000.00 5 Variable factory overhead 950,000.00 6 Fixed factory overhead 570,000.00 6,270,000.00 7 Selling and administrative expenses: 8 Variable selling and administrative expenses $1,120,000.00 9 Fixed selling and administrative expenses 200,000.00 1,320,000.00 Required: a. Prepare an income statement according to the absorption costing concept b. Prepare an income statement according to the variable costing concept.* c. What is the reason for the difference in the amount of income from operations reported in (a) and (b)? *Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading A colon () will automatically appear if it is required. Enter all amounts as positive numbers Income statements under absorption costing and variable costing Instructions Labels and Amount Descriptions Absorption Costing Income Statement Variable Cosung Income statement Fuenton Labels and Amount Descriptions Absorption Costing Income Statement Labels Fixed costs For the Month Ended August 31 a. Prepare an income statement according to the absorption costing concept Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading A colon will automatically appear if it is required. Enter all amounts as positive numbers. August 31 Amount Descriptions Contribution margin Contribution margin ratio Shawnee Motors Inc Cost of goods sold Absorption Costing Income Statement Fixed factory overhead costs (Label> Fixed selling and administrative expenses 1 Gross profit 2 Income from operations 3 Loss from operations Manufacturing margin 5 Planned contribution margin Sales Sales mix Selling and administrative expenses Total fixed costs Variable cost of goods sold Variable selling and administrative expenses Income statements under absorption costing and variable costing Instructions Labels and Amount Descriptions Absorption Costing Income Statement Variable Costing Income Statement Final Question Variable Costing Income Statement Final Question C. What is the reason for the difference in the amount of income from operations reported in (a) and (b)? Check all that apply d. Prepare an income statement according to the variable costing concept. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries Be sure to complete the statement heading A colon will automatically appear if it is required. Enter all amounts as positive numbers. Under variable costing, all of the fixed factory overhead cost is deducted in the period in which it is incurred, regardless of the amount of inventory change Shawnee Motors Inc Under absorption costing, when inventory increases the income statement will have a lower income from operations than will the variable costing income statement Variable Costing Income Statement Under variable costing, the units that were produced but unsold include fixed factory overhead cost, which is not included in cost of goods (Label sold 1 2 Under absorption costing, when inventory increases, the income statement will have a higher income from operations than will the variable costing income statement 3 There is no difference the income from operations reported in (a) and (b) is the same. 4 5 6 (Label) 7 8 9 10