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 (9,000 units) $1,080,000 Production costs (12,000 units): Direct materials $532,800 Direct labor 255,600 Variable factory overhead 128,400 Fixed factory overhead 85,200 1,002,000 Selling and administrative expenses: Variable selling and administrative expenses $155,300 Fixed selling and administrative expenses 60,100 215,400 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 31 Sales 1.000.000 Cost of goods sold 751.500 Cost of goods sold 751,500 Gross profit 328,500 Selling and administrative expenses 215,400 Operating income 113,100 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 1,080,000 Variable cost of goods sold 155,300 Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed factory overhead costs Fixed selling and administrative expenses 85.200 60,100 Total fixed costs 145,300 Operating income