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 (11,000 units) Production costs (11,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead $518,000 249,200 $1,100,000 124,600 82,600 974,400 Selling and administrative expenses Variable selling and administrative expect $151,000 Fixed selling and administrative expenses 511,500 209,500 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Inded July :31 b. Pre in dalement according to flow variable coding compl Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31 Fixed: c. What is the reason for the difference in the amount of operating income reported in (a) and (b)> Under the method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under income statement will have a higher operating income. all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the