eBook Show Me How Income Statements inder Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (19,500 units) $2,535,000 Production costs (25,000 units) : Direct materials $1,202,500 Direct labor 577,500 Variable factory overhead 287,500 Fixed factory overhead 192,500 2,260,000 Selling and administrative expenses: Variable selling and administrative expenses $350,300 Fixed selling and administrative expenses 135,600 485,900 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 Sales 48.10 Cost of goods sold Gross profit Selling and administrative expenses v Operating income v Feedback Check My Work a. Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead