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 (9,500 units)				$855,000
Production costs (12,000 units):
Direct materials		$399,600
Direct labor		192,000
Variable factory overhead		96,000
Fixed factory overhead		63,600		751,200
Selling and administrative expenses:
Variable selling and administrative expenses		$116,400
Fixed selling and administrative expenses		45,100		161,500

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
	$
	$
	$

b. Prepare an income statement according to the variable costing concept.

Shawnee Motors Inc.
Variable Costing Income Statement
For the Month Ended August 31
		$
		$
		$
Fixed costs:
	$
		$