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 (8,000 units) $960,000 Production costs (10,000 units): Direct materials $444,000 Direct labor 213,000 Variable factory overhead 107,000 Fixed factory overhead 71,000 835,000 Selling and administrative