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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
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: $1,950,000 Sales (19,500 units) Production costs (25,000 units): Direct materials $925,000 Direct labor 445,000 Variable factory overhead 222,500 147,500 1,740,000 Fixed factory overhead Selling and administrative expenses: $269,700 Variable selling and administrative expenses Fixed selling and administrative expenses 104,400 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 Cost of goods sold Gross profit Selling and administrative expenses Income from operations 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: Feedback Check My Work b. Under variable costing, the cost of goods manufactured includes only variable manufacturing costs. Learning Objective 1
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