Income Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (9,500 units) $1,330,000 Production costs (12,000 units): Direct materials $621,600 Direct labor 298,800 Variable factory overhead 148,800 Fixed factory overhead 99,600 1,168,800 Selling and administrative expenses: Variable selling and administrative expenses $181,200 Fixed selling and administrative expenses 70,100 251,300 If required, round interim per-unit calculations to the nearest cent. Question Content Area a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 Sales $Sales 1,330,000 Cost of goods sold Cost of goods sold Gross profit $Gross profit Selling and administrative expenses Selling and administrative expenses 251,300 Operating income $Operating income Incorrect Feedback Area Feedback a. Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead. Question Content Area b. Prepare an income statement according to the variable costing concept. Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31 Sales $Sales 1,330,000 Variable cost of goods sold Variable cost of goods sold Manufacturing margin $Manufacturing margin Variable selling and administrative expenses Variable selling and administrative expenses Contribution margin $Contribution margin Fixed costs: Fixed factory overhead costs $Fixed factory overhead costs 99,600 Fixed selling and administrative expenses Fixed selling and administrative expenses Total fixed costs Total fixed costs Operating income