eBook

Show Me How

Question Content Area

Income Statements under 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 (9,000 units)				$900,000
Production costs (12,000 units):
Direct materials		$444,000
Direct labor		213,600
Variable factory overhead		106,800
Fixed factory overhead		70,800		835,200
Selling and administrative expenses:
Variable selling and administrative expenses		$129,500
Fixed selling and administrative expenses		50,100		179,600

If required, round interim per-unit calculations to the nearest cent.

Question Content Area

a. Prepare an income statement according to the absorption costing concept.

a. Prepare an income statement according to the absorption costing concept. b. Prepare an income statement according to the variable costing concept