NOTE: please use the EXACT label names and account description as listed below. Please use the exact format (including the exact number of lines as in the screenshots below)

During the first month of operations ended May 31, Big Sky Creations Company produced 40,000 designer cowboy boots, of which 36,000 were sold. Operating data for the month are summarized as follows:

1	Sales		$4,500,000.00
2	Manufacturing costs:
3	Direct materials	$960,000.00
4	Direct labor	2,000,000.00
5	Variable manufacturing cost	520,000.00
6	Fixed manufacturing cost	120,000.00	3,600,000.00
7	Selling and administrative expenses:
8	Variable	$72,000.00
9	Fixed	80,000.00	152,000.00

During June, Big Sky Creations produced 32,000 designer cowboy boots and sold 36,000 cowboy boots. Operating data for June are summarized as follows:

1	Sales		$4,500,000.00
2	Manufacturing costs:
3	Direct materials	$7,680,000.00
4	Direct labor	1,600,000.00
5	Variable manufacturing cost	416,000.00
6	Fixed manufacturing cost	120,000.00	2,904,000.00
7	Selling and administrative expenses:
8	Variable	$72,000.00
9	Fixed	80,000.00	152,000.00

Required:

1.

Using the absorption costing concept, prepare income statements for (a) May and (b) June.*

2.

Using the variable costing concept, prepare income statements for (a) May and (b) June.*

3a.

Explain the reason for the differences in operating income in (1) and (2) for May.

3b.

Explain the reason for the differences in operating income in (1) and (2) for June.

4.

Based on your answers to (1) and (2), did Big Sky Creations Company operate more profitably in May or in June? Explain.

* 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.

Labels

June 30

Cost of goods sold

Fixed costs

For the Month Ended June 30

For the Month Ended May 31

May 31

Variable cost of goods sold

Amount Descriptions

Contribution margin

Contribution margin ratio

Cost of goods manufactured

Fixed manufacturing costs

Fixed selling and administrative expenses

Gross profit

Operating income

Inventory, June 1

Inventory, May 31

Operating loss

Manufacturing margin

Planned contribution margin

SalesSales mix

Selling and administrative expenses

Total cost of goods sold

Total fixed costs

Total variable cost of goods sold

Variable cost of goods manufactured

Variable selling and administrative expenses

Absorption Costing Income Statement-May Shaded cells have feedback. 1a. Using the absorption costing concept, prepare income statements for May. 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. Big Sky Creations Company Score: 55/65 Absorption Costing Income Statement For the Month Ended May 31 1 Sales $4,500,000.00 2 Cost of goods sold: 3 Inventory, May 31 4 Cost of goods manufactured 3,600,000.00 5 Cost of goods sold 3,240,000.00 6 Gross profit $1,260,000.00 7 Selling and administrative expenses 152,000.00 Operating income $1,108,000.00 Absorption Costing Income Statement-June Shaded cells have feedback. 1b. Using the absorption costing concept, prepare income statements for June. 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. Question not attempted. Big Sky Creations Company Score: 0/65 Absorption Costing Income Statement For the Month Ended June 30 1 2 (Label) 3 4 5 6 8 Shaded cells have feedback. X Variable Casting Income Statement-May Variable Costing Income Statement For the Month Ended May 31 1 $0.00 ! (Label) 3 $0.00 4 0.00 5 0,00 6 $0.00 FEE 7 0.00 ! $0.00 9 (Label) 10 $0.00 11 0.00 12 0.00 15 $0.00 Variable Costing Income Statement-June Shaded cells have feedback. For the Month Ended June 30 1 Sales $4,500,000.00 2 Variable cost of goods sold: 3 Inventory, June 1 $348,000.00 4 Variable cost of goods manufactured 2,784,000.00 5 Inventory, May 31 0.00 6 Total variable cost of goods sold $0.00 7 Manufacturing margin 0.00 8 Variable selling and administrative expenses $0.00 9 Fixed costs: 10 Fixed manufacturing costs $0.00 11 Selling and administrative expenses 0.00 12 Total fixed costs 0.00 13 Operating income $0.00