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 (17,000 units)$2,040,000Production costs (22,000 units):Direct materials$976,800Direct labor468,600Variable factory overhead235,400Fixed factory overhead156,2001,837,000Selling and administrative expenses:Variable selling and administrative expenses$284,700Fixed selling and administrative expenses110,200394,900

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

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

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

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Cost of goods sold $ fill in the blank

Cost of goods sold fill in the blank

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Direct labor $ fill in the blank

Cost of goods sold fill in the blank

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Income from operations $ fill in the blank

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

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

sales $ fill in the blank

Variable cost of goods sold fill in the blank

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Manufacturing margin $ fill in the blank

Variable selling and administrative expenses fill in the blank

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Contribution margin $ fill in the blank

Fixed costs:

Fixed factory overhead $ fill in the blank

Fixed selling and administrative expenses fill in the blank

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Total fixed costs fill in the blank

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Income from operations $ fill in the blank