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 $(19,500$ units$)$ $$1,950,000$

Production costs $(25,000$ units$)$:

Direct materials $$925,000$

Direct labor $445,000$

Variable factory overhead $222,500$

Fixed factory overhead $147,5001,740,000$

Selling and administrative expenses:

Variable selling and administrative expenses $$269,700$

Fixed selling and administrative expenses $104,400374,100$

If required, round interim per$-$unit calculations to the nearest cent.

Question Content Area

a$.$ Prepare an income statement according to the absorption costing concept.Gallatin County Motors Inc.

Absorption Costing Income Statement

For the Month Ended July $31$

b$.$ Prepare an income statement according to the variable costing concept.

Gallatin County Motors Inc.

Variable Costing Income Statement

For the Month Ended July $31$