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 (12,500 units) $1,875,000 Production costs (16,000 units): Direct materials $888,000 Direct labor 425,600 Variable factory overhead 212,800 Fixed factory overhead 142,400 1,668,800 Selling and administrative expenses: Variable selling and administrative expenses $258,700 Fixed selling and administrative expenses 100,100 358,800 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 $ 1,875,000 Cost of goods sold Gross profit Selling and administrative expenses 358,800 Operating income 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 1,875,000 Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses 258,700 Contribution margin Fixed costs: Fixed factory overhead costs 142,400 Fixed selling and administrative expenses v 100,100 242,500 Total fixed costs Operating income