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)				$1,890,000
Production costs (17,000 units):
Direct materials		$880,600
Direct labor		423,300
Variable factory overhead		210,800
Fixed factory overhead		141,100		1,655,800
Selling and administrative expenses:
Variable selling and administrative expenses		$256,600
Fixed selling and administrative expenses		99,300		355,900

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