During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 44,000 mini refrigerators, of which 39,000 were sold. Operating data for the month are summarized as follows:

1	Sales		$7,020,000.00
2	Manufacturing costs:
3	Direct materials	$3,080,000.00
4	Direct labor	1,056,000.00
5	Variable manufacturing cost	880,000.00
6	Fixed manufacturing cost	616,000.00	5,632,000.00
7	Selling and administrative expenses:
8	Variable	$663,000.00
9	Fixed	273,000.00	936,000.00

Required:

1.

Prepare an income statement based on the absorption costing concept.*

2.

Prepare an income statement based on the variable costing concept.*

3.

Explain the reason for the difference in the amount of operating income reported in (1) and (2).

* Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative.

Absorption and variable costing income statements Instructions Labels and Amount Descriptions Absorption Costing Income Statement Variable Costing Income Statement Final Question E Absorption Costing Income Statement X Variable Costing Income Statement 1. Prepare an income statement based on the absorption costing concept. Be sure to complete the statement Freacing. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Not loss should be negative. 2. Prepare an income statement based on the variable costing concept Be sure to complete the statement heading, Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Not loss should be negative. Kodiak Fridgeration Company Kodiak Fridgeration Company Absorption Costing Income Statement Variable Costing Income Statement For the Month Ended August 31 For the Month Ended August 31 1 Sales 1 Sales 2 Variable cost of goods sold: Variable cost of goods manufactured 4 4 - 2 Cost of goods sold 3 Cost of goods manufactured Inventory, August 31 5 s Total cost of goods sold 6 Gross profit 7 Selling and administrative expenses Operating income Inventory, August 31 Total variable cost of goods sold 5 Manufacturing margin 7 Variable selling and administrative expenses 8 Contribution margin 9 Fixed costs: 0 Fixed manufacturing costs 11 Fixed selling and administrative expenses 12 Total fixed costs 15 Operating income