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 (8,500 units)		$1,360,000
Production costs (11,000 units):
Direct materials	$651,200
Direct labor	312,400
Variable factory overhead	156,200
Fixed factory overhead	104,500		1,224,300
Selling and administrative expenses:
Variable selling and administrative expenses	$189,800
Fixed selling and administrative expenses	73,500		263,300

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 Ended July 31b. Prepare an income statement according to the variable costing concept. Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31 Fixed costs