Obj. 1.2 1. B. Income from operations, $847,000 PR 20-3A Absorption and variable costing income statements for two months and analysis During the first month of operations ended July 31, Western Creations 80.000 designer cowboy hats, of which 72,000 were sold. Operating data for summarized as follows: tions Company produced data for the month are SHOW ME HOW $4,320,000 Sales ..... .. Manufacturing costs: Direct materials ...... Direct labor ...... Variable manufacturing cost ...... Fixed manufacturing cost Selling and administrative expenses: Variable Fixed ..... $1,600,000 1,440,000 240,000 320,000 3,600,000 $ 144,000 25,000 169,000 During August, Western Creations produced 64,000 designer cowboy hats and sold 72,000 cowboy hats. Operating data for August are summarized as follows: $4,320,000 Sales Manufacturing costs: Direct materials ........ Direct labor Variable manufacturing cost .... Fixed manufacturing cost..... Selling and administrative expenses: Variable .... Fixed $1,280,000 1,152,000 192,000 320,000 2,944,000 $ 144,000 25,000 169,000 Chapter 20 Variable Costing for Management Analysis ting concept, prepare income statements for (A) July and (B) concept, prepare income statements for (A) July and (B) Instructions 1. Using the absorption costing concept, pt August 2. Using the variable costing concept, prepare income August. 3. A. Explain the reason for the differences tions in (1) and (2) for July. B. Explain the reason for the differences in the amount of income from opera- Explain the reason for the differences in tions in (1) and (2) for August. 4. Based on your answers to (1) and (2), did Western Creations Company operate Based on your more profitably in July or in August? Explain. plain the reason for the differences in the amount of income from opera