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% o capacity during the first month. The following data summarize the results for July: Sales (17,500 units) $2,275,000 Production costs (23,000 units): Direct materials $1,106,300 Direct labor 531,300 Variable factory overhead 264,500 Fixed factory overhead 177,100 2,079,200 Selling and administrative expenses: Variable selling and administrative expenses $322,300 Fixed selling and administrative expenses 124,800 447,100 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 Cost of goods sold Gross profit Selling and administrative expenses Operating income U 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 Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed factory overhead costs Fixed selling and administrative expenses Total fixed costs Operating income Feedback Check My Work b. Under variable costing, the cost of goods manufactured includes only variable manufacturing costs