Instructions During the first month of operations ended July 31, Western Creations Company produced 80,000 designer cowboy hats, of which 72,000 were sold. Operating data for the month are summarized as follows: 1 Sales $4,320,000.00 2 Manufacturing costs: Direct materials Direct labor $1,600,000.00 1.440,000.00 240,000.00 5 320,000.00 3,600,000.00 Variable manufacturing cost Fixed manufacturing cost 1 Selling and administrative expenses: Variable $144,000.00 Fixed 25,000.00 169,000.00 Instructions During August, Western Creations produced 64,000 designer cowboy hats and sold 72.000 cowboy hats. Operating data for August are summarized as follows: 1 Sales $4,320,000.00 2 Manufacturing costs Direct materials 3 $1.280.000,00 4 Direct labor 1.152,000.00 5 192.000.00 6 320,000.00 2.944,000.00 Variable manufacturing cost Fixed manufacturing cost Selling and administrative expenses Variable 8 $144,000.00 9 Fixed 25,000.00 169,000.00 . Required: 1. Using the absorption costing concept, prepare income statements for (a) July and (b) August 2. Using the variable costing concept, prepare income statements for (a) July and (b) August 3a. Explain the reason for the differences in the amount of income from operations in (1) and (2) for July 31. Explain the reason for the differences in the amount of income from operations in (1) and (2) for August. 4. Based on your answers to (1) and (2), did Western Creations Company operate more profitably in July or in August? Explain. *Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon () will automatically appear if required. Enter Inventory, July 31 as a negative number using a minus sign. Il a net loss is incurred, enter that amount as a negative number using a minus sign Absorption and variable costing income statements for two months and analysis Instructions Labels and Amount Descriptions ! Absorption Costing Income Statement-July ! Absorption Costing Income Statement-August Variable Costing Income Statement-July Variable Costing Income Statement-August !Final Questions Absorption Costing Income Statement-July Shaded cells have feedback. 12. Using the absorption costing concept, prepare income statements for July. Refer to the list of Labels and Amount Descriptions for the exact wording or the answer choices for text entries Be sure to complete the statement heading. A colon () will automatically appear it required. Enter Inventory, July 31 as a negative number using a minus sign. If a net loss is incurred, enter that amount as a negative number using a minus sign Score: 23/68 Western Creations Company Absorption Costing Income Statement For the Month Ended July 31 1 Sales 54.320,000.00 1 Cost of goods sold 3 4 5 Total cost of goods sold Gross profit $1,080,000.00 8 Absorption Costing Income Statement-August Shaded cells have feedback 1. Using the absorption costing concept prepare income statements for August. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for next entries. Be sure to complete the statement heading. A colon () will automatically appear it required. Wa net loss is incurred, enter that amount as a negative number using a minus sign. Question not attempted. Western Creations Company Score: 0/68 Absorption Costing Income Statement (Lab 1 ? Label) 3 4 5 6
