Income statements under absorption and variable costing 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) $2,655,000 Production costs (5,000 units): Direct materials $1,268,500 Direct labor 545,500 Variable factory overhead 89,000 Fixed factory overhead 139,500 2,042,500 Selling and administrative expenses Variable selling and administrative expenses $63,300 Fored selling and administrative expenses 26,600 89,900 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. 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: 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 What is the reason for the difference in the amount of Operating income reported in (a) and (0) Under the method, the foed manufacturing cost included in the cost of goods sold is matched with the revenues. Under cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the Operating income than will the variable costing income statement. all of the fixed manufacturing Income statement will have a higher