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 (5,000 units)				$3,950,000
Production costs (5,000 units):
Direct materials		$1,698,500
Direct labor		730,500
Variable factory overhead		119,000
Fixed factory overhead		187,000		2,735,000
Selling and administrative expenses:
Variable selling and administrative expenses		$84,800
Fixed selling and administrative expenses		35,600		120,400

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		$
Cost of goods sold		$
Gross profit		$
Selling and administrative expenses		$
Operating income		$

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

Gallatin County Motors Inc.
Variable Costing Income Statement
For the Month Ended July 31
Sales					$
Variable cost of goods sold					$
Manufacturing margin					$
Variable selling and administrative expenses					$
Contribution margin					$
Fixed costs:
Fixed factory overhead costs		$
Fixed selling and administrative expenses		$
Total fixed costs					$
Operating income					$