During the first month of operations ended May 31, Big Sky Creations Company produced 40,000 designer cowboy boots, of which 36,000 were sold. Operating data for the month are summarized as follows:

During June, Big Sky Creations produced 32,000 designer cowboy boots and sold 36,000 cowboy boots. Operating data for June are summarized as follows:

1.

Using the absorption costing concept, prepare income statements for (a) May and (b) June.*

2.

Using the variable costing concept, prepare income statements for (a) May and (b) June.*

3a.

Explain the reason for the differences in operating income in (1) and (2) for May.

3b.

Explain the reason for the differences in operating income in (1) and (2) for June.

4.

Based on your answers to (1) and (2), did Big Sky Creations Company operate more profitably in May or in June? Explain.

* 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 and amount descriptions:

Labels
June 30
Cost of goods sold
Fixed costs
For the Month Ended June 30
For the Month Ended May 31
May 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, June 1
Inventory, May 31
Operating loss
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

I puts 1's in the table for purposes of matching the format that is required for submission.

During the first month of operations ended May 31, Big Sky Creations Company produced 40,000 designer cowboy boots, of which 36,000 were sold. Operating data for the month are summarized as follows: 1 Sales $4,500,000.00 2 Manufacturing costs: Direct materials 3 $960,000.00 4 Direct labor 2,000,000.00 5 Variable manufacturing cost 520,000.00 6 120,000.00 3,600,000.00 Fixed manufacturing cost 1. Selling and administrative expenses: 8 Variable $72,000.00 9 Fixed 80,000.00 152,000.00 During June, Big Sky Creations produced 32,000 designer cowboy boots and sold 36,000 cowboy boots. Operating data for June are summarized as follows: During June, Big Sky Creations produced 32,000 designer cowboy boots and sold 36,000 cowboy boots. Operating data for June are summarized as follows: 1 Sales $4,500,000.00 2 Manufacturing costs: 3 Direct materials $7,680,000.00 4 Direct labor 1,600,000.00 5 416,000.00 Variable manufacturing cost Fixed manufacturing cost 6 120,000.00 2,904,000.00 7 Selling and administrative expenses: Variable $72,000.00 9 Fixed 80,000.00 152,000.00 Required: * 1. Using the absorption costing concept, prepare income statements for (a) May and (b) June.* * 2. Using the variable costing concept, prepare income statements for (a) May and (b) June. * 3a. Explain the reason for the differences in operating income in (1) and (2) for May. 3b. Explain the reason for the differences in operating income in (1) and (2) for June. 4. Based on your answers to (1) and (2), did Big Sky Creations Company operate more profitably in May or in June? Explain. * 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 Costing Income Statement-May Shaded colls have feedback X 1a. Using the absorption costing concept prepare income statements for May. 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 resulis in a negative amount For example: Netloss should be negative. Big Sky Creations Company Score: 47/65 Absorption Costing Income Statement For the Month Ended May 31 1 Sales 2 Cost of goods sold: 3 Cost of goods manufactured 3,240,000.00 1 Inventory, May 31 5 Total cost of goods sald 6 Gross profit Selling and administrative expenses 3 Operating income 152,000.00 Absorption Costing Income Statement-June Shaded cells have feedback 15. Using the absorption costing concept, prepare income statements for June. 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 it is required. Enter amounts as positive numbers unless the amount is a Galleriet tient results in a negative writ. For example: Next loss soxuld be negative. Question not attempted. Score: 0/65 Big Sky Creations Company Absorption Costing Income Statement (Label) 11 $1.00 21 1 1 $1.00