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 (4,000 units) $2,600,000 Production costs (4,350 units): Direct materials $1,218,000 Direct labor 522,000 Variable factory overhead 87,000 Fixed factory overhead 130.500 1,957,500 Selling and administrative expenses Variable selling and administrative expenses 360,000 Fixed selling and administrative expenses 25,000 85,000 a. Prepare an income statement according to the absorption costing concept 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 2,600,000 Variable cost of goods sold 480,000 X Sales x 1,740,000 X Variable selling and administrative expenses 60,000 Contribution margin 860,000 Fixed costs: Fixed factory overhead costs 130,500 Fixed selling and administrative expenses 25,000 Total fixed costs 155,500 Operating income 704,500