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 (14,500 units)				$2,030,000
Production costs (19,000 units):
Direct materials		$984,200
Direct labor		473,100
Variable factory overhead		235,600
Fixed factory overhead		157,700		1,850,600
Selling and administrative expenses:
Variable selling and administrative expenses		$286,800
Fixed selling and administrative expenses		111,000		397,800

If required, round interim per-unit calculations to the nearest cent.

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		$