During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 60,000 mini refrigerators, of which 54,000 were sold. Operating data for the month are summarized as follows:

1	Sales		$10,260,000.00
2	Manufacturing costs:
3	Direct materials	$5,100,000.00
4	Direct labor	1,800,000.00
5	Variable manufacturing cost	1,200,000.00
6	Fixed manufacturing cost	840,000.00	8,940,000.00
7	Selling and administrative expenses:
8	Variable	$972,000.00
9	Fixed	324,000.00	1,296,000.00

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 income from operations reported in (1) and (2).

* 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 required. Enter Inventory, August 31 as a negative number using a minus sign. If a net loss is incurred, enter that amount as a negative number using a minus sign.