Instructions Labels and Amount Descriptions Absorption Costing Income Statement Instructions $9,500,000.00 1 Sales (38,000 units) 2 Production costs (46.500 units Direct materials 54,650,000.00 4 Direct labor 1,860,000.00 5 1.162,500.00 697,500.00 8,370,000.00 Variable factory overhead Fixed factory overhead Selling and administrative expenses Variable selling and administrative expenses Fixed selling and administrative expenses . $1,250,000.00 235,000.00 1485,000.00 Required: a. Prepare an income statement according to the absorption costing concept b. Prepare an income statement according to the variable costing concept c. What is the reason for the cutorence in the amount of Operating income reported in (a) and (b)? * Be sure to complete the statement heading Refer to the list of Label and Amount Descriptions provided for the exact warding of the answer choices for text entries. A colon () will automationly appear if it is required. Enter amounts as posible numbers unless the amount is a calculation that results in a negative amount. For example: Not loss should be negative. Experises should be posible, Previous Ne ydgenow.com D and learning resource from Cengage Learning Gallatin County Motor Income statements under absorption costing and variable costing Instructions Labels and Amount Descriptions Absorption 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 seling and administrative expenses Gross profit Operating income Loss from operations Manufacturing margin Planned contribution margin Sales Sales mix Selling and administrative expenses Income statements under absorption costing and variable costing Instructions Labels and Amount Descriptions Absorption Costing Income Statement Labels and Amount Descriptions July Amount Descriptions Contribution margin Contribution margin ratio Cost of goods sold Fixed factory overhead costs Fixed selling and administrative expenses 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 Absorption Costing Income Statement a Propare 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 it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Not loss should be negative. Expenses should be positive Gallatin County Motors Inc. Absorption Costing Income Statement Income statements under absorption costing and variable costing Instructions Labels and Amount Descriptions Absorption Costing Income Statement Variable Costing Income Statement b. Prepare an income statement according to the variable costing concept. Be sure to complete the statement heading. Refer to the last of Labels wid Amount Descriptions provided for the exact wording of the answer choices for extentries. A colon () will automaticwly appear if it is required Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Nor loss should be negative. Expenses should be positive Gallatin County Motors Inc. Variable Costing Income Statement Label Label 1 10 Pris Income statements under absorption costing and variable costing Instructions Labels and Amount Descriptions Absorption Costing Income Statement Final Question c. What is the reason for the difference in the amount of Operating Income reported in (a) and (b)? Check all that apply Under variable conting, all of the fixed factory overhead coat is deducted in the period in which it is incurred, regardless of the amount of inventory change Under absorption costing, when inventory increases, the income statement wit have a lower Operating income than will the variable costing income statement There is no difference: the Operating income reported in (a) and (b) is the same. Under absorption costing, when inventory increases, the income statement will have a higher Operating income than will the variable costing income statement, Under variable conting, the units that were produced but unsold include fixed factory overhoud cost, which is not included in cost of goods sold