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 (13,500 units)				$2,160,000
Production costs (17,000 units):
Direct materials		$1,006,400
Direct labor		482,800
Variable factory overhead		241,400
Fixed factory overhead		161,500		1,892,100
Selling and administrative expenses:
Variable selling and administrative expenses		$293,300
Fixed selling and administrative expenses		113,500		406,800

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
	$
	$
Income from operations	$

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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		$
		$
		$
Fixed costs:
	$
		$