ncome Statements under Absorption Costing and Variable Costing Joplin Industries Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable J-Sports logo. The company began operations on May 1 and operated at 100% of capacity (62,700 units) during the first month, creating an ending inventory of 5,700 units. During June, the company produced 57,000 garments during the month but sold 62,700 units at $100 per unit. The June manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Cost Total Cost Manufacturing costs in June 1 beginning inventory: Variable 5,700 $40.00 $228,000 Fixed 5,700 15.00 85,500 Total $55.00 $313,500 Manufacturing costs in June: Variable 57,000 $40.00 $2,280,000 Fixed 57,000 16.50 940,500 Total $56.50 $3,220,500 Selling and administrative expenses in June: Variable 62,700 19.50 $1,222,650 Fixed 62,700 7.00 438,900 Total 26.50 $1,661,550 a. Prepare an income statement according to the absorption costing concept for June. Joplin Industries Inc. Absorption Costing Income Statement For the Month Ended June 30 $- Select - Cost of goods sold: $- Select - - Select - - Select - $- Select - - Select - $- Select - b. Prepare an income statement according to the variable costing concept for June. Joplin Industries Inc. Variable Costing Income Statement For the Month Ended June 30 $- Select - - Select - $- Select - - Select - $- Select - Fixed costs: $- Select - - Select - - Select - $- Select - c. What is the reason for the difference in the amount of income from operations reported in (a) and (b)? Under the method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under , all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory decreases, the income statement will have a lower income from operations. Check My Work