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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
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 (17,500 units) | $2,100,000 | ||||
Production costs (23,000 units): | |||||
Direct materials | $1,021,200 | ||||
Direct labor | 489,900 | ||||
Variable factory overhead | 246,100 | ||||
Fixed factory overhead | 163,300 | 1,920,500 | |||
Selling and administrative expenses: | |||||
Variable selling and administrative expenses | $297,700 | ||||
Fixed selling and administrative expenses | 115,200 | 412,900 |
If required, round interim per-unit calculations to the nearest cent.
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 | $ |
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