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 $(12,000$ units$)$ $$1,680,000$

Production costs $(15,000$ units$)$:

Direct materials $$777,000$

Direct labor $373,500$

Variable factory overhead $186,000$

Fixed factory overhead $124,5001,461,000$

Selling and administrative expenses:

Variable selling and administrative expenses $$226,500$

Fixed selling and administrative expenses $87,700314,200$

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.

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 $$\_\_\_\_\_\_\_\_$