HOW TO FIND THE COST OF GOODS SOLD

Income Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operati for July: Sales (17,000 units) $2,040,000 Production costs (22,000 units): Direct materials $976,800 Direct labor 468,600 Variable factory overhead 235,400 Fixed factory overhead 156,200 1,837,000 Selling and administrative expenses: Variable selling and administrative expenses $284,700 Fixed selling and administrative expenses 110,200 394,900 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 $ 2,040,000 Cost of goods sold X Gross profit Selling and administrative expenses 394,900 Operating income