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:

1	Sales (38,000 units)		$9,500,000.00
2	Production costs (44,500 units):
3	Direct materials	$3,560,000.00
4	Direct labor	2,002,500.00
5	Variable factory overhead	1,112,500.00
6	Fixed factory overhead	667,500.00	7,342,500.00
7	Selling and administrative expenses:
8	Variable selling and administrative expenses	$1,130,000.00
9	Fixed selling and administrative expenses	245,000.00	1,375,000.00

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

a. Prepare an income statement according to the absorption costing concept. 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. Expenses should be positive. Score: 33/43 Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 1 Sales $9,500,000.00 78,375.00 2 Cost of goods sold 3 Gross profit 4 Selling and administrative expenses $9.421,625.00 1,375,000.00 5 Operating income $8,046,625.00 b. Prepare an income statement according to the variable costing concept. 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. Expenses should be positive. Score: 70/84 Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31 1 Sales 2 $9,500,000.00 71,250.00 $9,428,750.00 1.130,000.00 $8,298,750.00 Variable cost of goods sold 3 Manufacturing margin 4 Variable selling and administrative expenses 5 Contribution margin 6 Fixed costs: Fixed factory overhead costs Fixed selling and administrative expenses Total fixed costs 10 Operating income 7 $667,500.00 8 245,000.00 9 912,500.00 $7,386,250.00