During the first month of operations ended May 31, Big Sky Creations Company produced 55,750 designer cowboy boots, of which 52,650 were sold. Operating data for the month are summarized as follows:

1	Sales		$789,750.00
2	Manufacturing costs:
3	Direct materials	$395,825.00
4	Direct labor	117,075.00
5	Variable manufacturing cost	61,325.00
6	Fixed manufacturing cost	55,750.00	629,975.00
7	Selling and administrative expenses:
8	Variable	$26,325.00
9	Fixed	26,325.00	52,650.00

During June, Big Sky Creations produced 49,550 designer cowboy boots and sold 52,650 cowboy boots. Operating data for June are summarized as follows:

1	Sales		$789,750.00
2	Manufacturing costs:
3	Direct materials	$351,805.00
4	Direct labor	104,055.00
5	Variable manufacturing cost	54,505.00
6	Fixed manufacturing cost	55,750.00	566,115.00
7	Selling and administrative expenses:
8	Variable	$26,325.00
9	Fixed	26,325.00	52,650.00

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.

During the first month of operations ended May 31, Bg Sky Creations Company produced 55 750 designer cowboy boons, of which 52,650 were sold Operating data for the month are summarized as folows: 1 Sales I $769,750.00 Manufacturing costs ! $395.825.00 Direct materials Direct labor + 117.075.00 61,325.00 55,25000 629.975.00 Variable manufacturing cost 6 Fixed manufacturing cost Selling and administrative expenses . 8 Variable $26.325.00 Fixed 26,325.00 52.650.00 During June, Big Sky Creatione produced 48,550 designer cowboy boots and sold 52,850 comboy bools. Operating data for Jure are summarized as follows: Sales $289.750,00 Manufacturing costs: Direct materials $351 90S OD Direct lahor 104,055.00 54 SOS0D 5 55.750.00 566 115.00 Variable manufacturing cost Fixed manufacturing cost Selling and administrative experides. Variable $26,325.00 o Fixed 26,325 00 5265000 Required: 1. Using the absorption costing corep, prepare income statements for (a) Mey and (b) June. 2. Using the variable casting concept, prepare income statements for () May and (D)... 39. Explain the reason for the differences in operating income in (1) and (2) for Max 39. Explain the reason for the dittorences in opwing income in (1) and (2) for.Amne. 4. Based on your answers 10 (1) and (21. did Big Sky Creations Company operare more profitably in May or in me? Expan. Be sure to complete the statement heading. Retorta me dar of Laos and Amount Descriptions provided for the exact wording of the answer choices for text entries. A calon () will automatically appear it is required. Enter amounts as positive numbers unless the amount is ,it scalation that result in a negative amount. For example: Ners 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 Variable cost of goods manufactured Variable selling and administrative expenses Absorption Costing Income Statement-May Shaded cells have feedback. 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 (:) 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. Big Sky Creations Company Score: 12/65 Absorption Costing Income Statement For the Month Ended May 31 1 2 (Label) 3 3 4 5 6 7 8 Absorption Costing Income Statement-June Shaded cells have feedback. 1b. 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 (:) 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. Question not attempted. Big Sky Creations Company Score: 0/65 Absorption Costing Income Statement (Label) 1 2 (Label) 3 4 5 6 7 8 Variable Costing Income Statement-May Shaded cells have feedback. 2a. Using the variable 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 (:) 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. Question not attempted. Big Sky Creations Company Score: 0/106 Variable Costing Income Statement (Label) 1 2 (Label) 3 4 5 6 7 8 9 (Label) 10 11 12 13 Variable Costing Income Statement-June Shaded cells have feedback. 2b. Using the variable 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 (:) 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. Question not attempted. Big Sky Creations Company Score: 0/106 Variable Costing Income Statement (Label) 1 2 (Label) 3 4 5 6 7 8 9 (Label) 10 11 12 13