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 (17,000 units) $2,720,000 Production costs (22,000 units): Direct materials $1,302,400 Direct labor 624,800 Variable factory overhead 312,400 Fixed factory overhead 209,000 2,448,600 Selling and administrative expenses: Variable selling and administrative expenses $379,500 Fixed selling and administrative expenses 146,900 526,400

Prepare an income statement according to the variable costing concept. Variable Costing Income Statement For the Month Ended July 31

Sales

Variable cost of goods sold

Manufacturing margin

Variable selling and administrative expenses

Contribution margin

Fixed costs:

Fixed factory overhead costs

Fixed selling and administrative expenses

Total fixed costs

Operating income