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 4 2 Manufacturing costs: 3 Direct materials Direct labor 5 Variable manufacturing cost 6 Fixed manufacturing cost 7 Selling and administrative expenses: 8 Variable $3,080,000.00 1,056,000.00 880,000.00 616,000.00 5,632,000.00 $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. Labels August 31 Cost of goods sold Fixed costs For the Month Ended August 31 Variable cost of goods sold Amount Descriptions Contribution margin Contribution margin ratio Cost of goods manufactured Fixed manufacturing costs Fixed selling and administrative expenses Gross profit Operating income Inventory, August 31 Loss from operations Manufacturing margin Planned contribution margin Sales Sales mix Selling and administrative expenses Total cost of goods sold Total fixed costs Total variable cost of goods sold Variable cost of goods manufactured Variable selling and administrative expenses 1. Prepare an income statement based on the absorption 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 (1) 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. Kodiak Fridgeration Company Absorption Costing Income Statement (Label) 1 2 (Label) 3 4 5 6 7 8 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: Net loss should be negative. Kodiak Fridgeration Company Variable Costing Income Statement (Label) 1 2 (Label) 3 4 5 7 8 9 (Label) 10 11 12 13 3. Explain the reason for the difference in the amount of operating income reported in (1) and (2). The Operating income reported under costing, due to costing. costing exceeds the Operating income reported under manufacturing costs that are deferred to a future month under
