Income statements under absorption and variable conting 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 (4,500 units) $2,610,000 Production costs (5,000 units): Direct materials $1,247,000 Direct labor Variable factory overhead 87,500 Fixed factory overhead 137,000 2,007,500 Selling and administrative expenses Variable selling and administrative expenses Fixed selling and administratfe expenses 26,100 88,300 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below 536,000 $62,200 Open spreadsheet ETER Open spreadsheet 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 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 $ $ Fixed costs: $ c. What is the reason for the diference in the amount of Operating Income reported in (a) and (b)? method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the Income statement will have a higher Operating income than will the variable costing income statement. Under the all of