Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc, manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (53,900 units) during the first month, creating an ending inventory of 4,900 units. During February, the company produced 49,000 units during the month but sold 53,900 units at $95 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Unit Total Units Cost Cost Manufacturing costs in February 1 beginning inventory: Variable 4,900 $38.00 $186,200 Fixed 4,900 14.00 68,600 Total $52.00 $254,800 Manufacturing costs in February Variable 49,000 49,000 Fixed $38.00 $1,862,000 15.40 754,600 $53.40 $2,616,600 Total Selling and administrative expenses in February Variable 53,900 Fixed 53,900 $18.20 $980,980 7.00 377,300 $25.20 $1,358,280 Total a. Prepare an income statement according to the absorption costing concept for the month ending February 28, Fresno Industries Inc. Absorption Costing Income Statement For the Month Ended February 28 Sales 4.229,60 X Cost of goods sold: a. Prepare an income statement according to the absorption costing concept for the month ending February 28. Fresno Industries Inc. Absorption Costing Income Statement For the Month Ended February 28 Sales 4,229,680 X Cost of goods sold: Beginning inventory 254,800 Cost of goods manufactured 2,616,600 Total cost of goods sold Gross profit Selling and administrative expenses 1,358,280 Operating income Feedback Check My Work a. Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory ove costs are included as part of factory overhead. b. Prepare an income statement according to the variable costing concept for the month ending February 28. Fresno Industries Inc. Variable Costing Income Statement For the Month Ended February 28 Sales Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses s Total fixed costs Operating income