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 (18,500 units) $2,775,000 Production costs (24,000 units): Direct materials $1,332,000 Direct labor 638,400 Variable factory overhead 319,200 Fixed factory overhead 213,600 2,503,200 Selling and administrative expenses: Variable selling and administrative expenses $388,000 Fixed selling and administrative expenses 150,200 538,200 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 2,775,000 Cost of goods sold Gross profit Selling and administrative expenses Income from operations con Feedback Check My Work a. Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead. Learning Objective 1. b. Prepare an income statement according to the variable costing concept. Shawnee Motors Inc. Variable Costing Income Statement For the Month Ended August 31 Sales Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed factory overhead Fixed selling and administrative expenses Total fixed costs Income from operations