During the first month of operations ended July 31, Western Creations Company produoed 80,000 designer cowboy hats, of which 72,000 were sold. Operating data for the month are summarized as follows: + Sales 54,320,000.00 2 Manufacturing costs 1 Direct materials $1.500,000.00 Direct Labor 1.440,000.00 240,000.00 320,000.00 3,600,000.00 Variable manufacturing cost Fixed manufacturing cost Selling and administrative expenses Variable $144,000.00 1 Fixed 25,000.00 169,000.00 During August, Western Creations produced 64,000 designer cowboy hats and sold 72,000 cowboy hats. Operating data for August are summarized as follows: 1 Sales $4,320,000.00 2 Manufacturing costs 3 Direct materials 4 Direct labor $1,280,000.00 1.152,000,00 192,000.00 320,000.00 5 6 Variable manufacturing cost Fixed manufacturing cost Selling and administrative expenses: 2.944,000.00 Variable $144,000.00 25,000.00 Fixed 169,000.00 Required: 1. Using the absorption costing concept, prepare income statements for (a) July and (b) August 2. Using the variable costing concept, prepare income statements for (a) July and (b) August." 3a. Explain the reason for the differences in the amount of income from operations in (1) and (2) for July 3b. Explain the reason for the differences in the amount of income from operations in (1) and (2) for August 4. Based on your answers to (1) and (2), did Western Creations Company operate more profitably in July or in August? Explain. *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, July 31 as a negative number using a minus sign. I a net loss is incurred, enter that amount as a negative number using a minus sign. Labels and Amount Descriptions Labels August 31 Cost of goods sold Fixed costs For the Month Ended August 31 For the Month Ended July 31 July 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 Income from operations Inventory, August 1 Inventory, July 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 ta. Using the absorption costing concept, prepare income statements for July. Refer to the lists of Labels and Amount Descriptions for the exact wording or the answer choices for text entries. Be sure to complete the statement heading. A colon () will automatically appear if required. Enter Inventory, July 31 as a negative number using a minus sign. Il a net loss is incurred, enter that amount as a negative number using a minus sign. Western Creations Company Absorption Costing Income Statement For the Month Ended July 31 1 Sale 54.320,000.00 1 $5,600,000.00 4 Cost of goods sold: Cost of goods manufactured Inventory, July 31 Total cost of goods sold Gross profit Selling and administrative expenses Income from operations 16. Using the absorption costing concept, prepare income statements for August. Refer to the Asts 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. If a not loss is incurred, enter that amount as a negative number using a minus sign Western Creations Company Absorption Costing Income Statement For the Month Ended August 31 1 Sales $4,320,000.00 $2.944,000.00 ? Cost of goods sold 1 Cost of goods manufactured Inventory, August 1 5 Total cost of goods sold 6 Gross profit 7 Selling and administrative expenses Income from operations Variable Costing Income Statement-July 2a. Using the variable costing concept, prepare income statements for July. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entrios. Be sure to complete the statement heading. A colon () will automatically appear if required. Enter Inventory, July 31 as a negative number using a minus sign. Il a not loss is incurred, enter that amount as a negative number using a minus sign Western Creations Company Variable Costing Income Statement (Lobol) 1 Label Variable Costing Income Statement-July Western Creations Company Variable Costing Income Statement (Label) 1 2 (Label) 3 4 5 6 7 8 9 (Label) 10 11 12 13 I 2b. Using the variable costing concept, prepare income statements for August. 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 it required. We net loss is incurred, enter that amount as a negative number using a minus sign Western Creations Company Variable Costing Income Statement (Label) ? (Label 1 Variable Costing Income Statement-August Western Creations Company Variable Costing Income Statement (Label) 1 2 (Label) 3 4 5 6 7 8 9 (Label) 10 11 12 13