Income Statements underAbsorptionandVariable Costing

Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August:

Sales (13,000 units) $2,080,000

Production costs (17,000 units):

Direct materials. $1,006,400

Direct labor 482,800

Variable factory overhead 241,400

Fixed factory overhead 161,500 1,892,100

Selling and administrative expenses:

Variable selling and administrative expenses $293,300

Fixed selling and administrative expenses 113,500 406,800

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

a.Prepare an income statement according to the absorption costing concept.

Shawnee Motors Inc.Absorption Costing Income StatementFor the Month Ended August 31

Sales:$?

Cost of goods sold:?

Gross profit:$?

Selling and administrative expenses:?

Income from operations: $?

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

Shawnee Motors Inc.Variable Costing Income StatementFor the Month Ended August 31

Sales: $

Variable cost of goods sold: ?

Manufacturing margin: $?

Variable selling and administrative expenses: ?

Contribution margin: $?

Fixed costs:

Fixed factory overhead: $?

Fixed selling and administrative expenses: ?

Total fixed costs:?

Income from operations: $?