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 (10,500 units) Production costs (14,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Selling and administrative expenses: Variable selling and administrative expenses $673,400 $1,365,000 323,400 161,000 107,800 1,265,600 $196,200 Fixed selling and administrative expenses 75,900 272,100 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Sales Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 Cost of goods sold $ 1,365,000 X Gross profit Selling and administrative expenses 272,100 Operating income Feedback Check My Work a. Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead. b. Prepare an income statement according to the variable costing concept. Previous Next >