Instructions 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 1 Sales (51,000 units) $7,750,000.00 1 Production costs (38,000 units): 5 Direct materials $3,040,000.00 4 Direct labor 1,710,000.00 950,000.00 5 Variable factory overhead 5 570,000.00 6,270,000.00 Fixed factory overhead 1 Selling and administrative expenses: Variable selling and administrative expenses $1,120,000.00 9 Fixed selling and administrative expenses 200,000.00 1,320,000.00 Absorption Costing Income Statement x a. Prepare an income statement according to the absorption costing concept. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon () will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive. Gallatin County Motors Inc. Absorption Costing Income Statement (Label) 1 2 3 4 5 x Variable Costing Income Statement Gallatin County Motors Inc. Variable Costing Income Statement (Label) 1 2 3 5 6 (Label) 7 I 8 9 10 Final Question c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)? Check al that apply. There is no difference: the Operating income reported in (a) and (b) is the same. Under variable costing, the units that were produced but untold include fixed factory overhead coat, which is not included in cost of goods sold. Under absorption costing, when inventory increases, the income statement will have a higher Operating Income than will the variable costing Income statement. Under variable costing, all of the fixed factory overhead cost is deducted in the period in which it is incurred, regardess of the amount of inventory change. Under absorption costing, when inventory increases, the income statement will have a lower Operating income than wil the variable costing income statement Labels and Amount Descriptions Labels Fixed costs For the Month Ended July 31 July 31 Amount Descriptions Contribution margin Contribution margin ratio Cost of goods sold Fixed factory overhead costs Fixed selling and administrative expenses Gross profit Gross profit Operating income Loss from operations Manufacturing margin Planned contribution margin Sales Sales mix Selling and administrative expenses Total fixed costs Variable cost of goods sold Variable selling and administrative expenses