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 (11,500 units)				$1,840,000
Production costs (15,000 units):
Direct materials		$888,000
Direct labor		426,000
Variable factory overhead		213,000
Fixed factory overhead		142,500		1,669,500
Selling and administrative expenses:
Variable selling and administrative expenses		$258,800
Fixed selling and administrative expenses		100,200		359,000

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		$fill in the blank 5ab0ff049fac06c_2
Variable cost of goods sold		fill in the blank 5ab0ff049fac06c_4
Manufacturing margin		$fill in the blank 5ab0ff049fac06c_6
Variable selling and administrative expenses		fill in the blank 5ab0ff049fac06c_8
Contribution margin		$fill in the blank 5ab0ff049fac06c_10
Fixed costs:
Fixed factory overhead	$fill in the blank 5ab0ff049fac06c_12
Fixed selling and administrative expenses	fill in the blank 5ab0ff049fac06c_14
Total fixed costs		fill in the blank 5ab0ff049fac06c_16
Income from operations		$fill in the blank 5ab0ff049fac06c_18