edook Show Me How Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (10,500 units) $1,680,000 Production costs (14,000 units) Direct materials $828,800 Direct labor 397,600 Variable factory overhead 198,800 Fixed factory overhead 133,000 1,558,200 Selling and administrative expenses: Variable selling and administrative expenses $241,500 Fixed selling and administrative expenses 93,500 335,000 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Shawnee Motors Inc. Absorption Costing Income Statement For the Month Ended August 31 Sales 1,680,000 1,258,530 X Cost of goods sold Gross profit 121470 X Show Me How Shawnee Motors Inc. Absorption Costing Income Statement For the Month Ended August 31 Sales 1,680,000 Cost of goods sold 1,258,530 X Gross profit 421,470 X Selling and administrative expenses 335,000 Income from operations 86,470 X Feedback Check My Work a. Under absorption costing, the cost of goods manufactured includos direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are Included as part of factory overhoad. Learning Objective 1. b. Prepare an income statement according to the variable costing concept. Shawnee Motors Inc. Variable Costing Income Statement For the Month Ended August 31 Sales 1,650,000 Variable cost of goods sold 1.151.115 b. Prepare an Income statement according to the variable costing concept. Shawnee Motors Inc. Variable Costing Income Statement For the Month Ended August 31 Sales 1,680,000 Variable cost of goods sold 1,151,115 X 528,885 X 241,500 287,385 x Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed factory overhead Fixed selling and administrative expenses Total fixed costs 133,000 93,500 226,500 Income from operations 60,885 X Feedback Check My Work b. Under variable costing, the cost of goods manufactured includes only variable manufacturing costs Learning Objective 1