Income Statements under Absorption and Variable Costing

Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August:

Sales (14,000 units) $2,240,000

Production costs (18,000 units):

Direct materials $1,065,600

Direct labor 511,200

Variable factory overhead 255,600

Fixed factory overhead 171,000

2,003,400

Selling and administrative expenses:

Variable selling and administrative expenses $310,500

Fixed selling and administrative expenses 120,200

430,700

If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept.

Shawnee Motors Inc.
Absorption Costing Income Statement
For the Month Ended August 31
Sales	$
Cost of goods sold
Gross profit	$
Selling and administrative expenses
Income from operations	$