During the first month of operations onded July 31, Western Creations Company produced 55,000 designer cowboy hats, of which were sold Operating data for the month are summarized as foto 1 Sales 5804,450.00 2. Manufacturing costs: 3 Direct matatals 5467.500.00 126,500.00 Direct labor 1 Variable manufacturing cost 77,000.00 55.000.00 92600300 5 Fred manufacturing cost Selling and administrative expenses 1 Variable $25.950.00 Fixed 25,950.00 51,900.00 during August, Western Creations produced 48.000 designer cowboy hats and sold 51.900 cowboy hats. Operating data for August are summarized as follows During August, Western Creations produced 48,800 designer cowboy hats and sold 51,900 cowboy hats. Operating data for August are summarized as 1. Sales $804,450.00 2 Manufacturing costs 3 Direct materials $414,800.00 4 Direct labor 112,240.00 68,320.00 5 Variable manufacturing cost Fixed manufacturing cost Selling and administrative expenses: 6 55,000.00 650,360.00 1 Variable $25,950.00 25,950.00 9 Fixed 51,900.00 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 (9 will automatically appear if required. Enter Inventory, July 31 as a negative number using a minus sign Ifa net loss is incurred, enter that amount as a negative number using a minus sign. 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 Foxed manufacturing costs Fixed seling 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 a. Using the absorption costing concept prepare income statements for July Refer to the lists of Labels and Amount Descriptions for the exact wording of the anmer choices for text entries sa negative number using a minus sign If a met loss is incurred, enter that amount as a negative number using a minus sign Western Creations Company Score: 12/68 Absorption Costing Income Statement (Label) 1 Sales $804,450.00 2 Cost of goods sold 3 4 5 7 3
