On July 31, the end of the first month of operations, Del Ray Equipment Company prepared the following income statement, based on the variable costing concept:

Del Ray Equipment Company

Variable Costing Income Statement

For the Month Ended July 31, 2016

1	Sales (50,000 units)		$6,250,000.00
2	Variable cost of goods sold:
3	Variable cost of goods manufactured	$3,100,000.00
4	Less ending inventory (12,000 units)	600,000.00
5	Variable cost of goods sold		2,500,000.00
6	Manufacturing margin		$3,750,000.00
7	Variable selling and administrative expenses		1,575,000.00
8	Contribution margin		$2,175,000.00
9	Fixed costs:
10	Fixed manufacturing costs	$620,000.00
11	Fixed selling and administrative expenses	487,500.00	1,107,500.00
12	Income from operations		$1,067,500.00

Prepare an income statement under absorption costing. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Less, Plus or colons (:) will automatically appear if required. If a net loss is incurred, enter that amount as a negative number using a minus sign.

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Labels and Amount Descriptions

Labels
For the Month Ended July 31, 2016
July 31, 2016
Amount Descriptions
Contribution margin
Cost of goods manufactured
Cost of goods sold
Ending inventory
Fixed manufacturing costs
Fixed selling and administrative expenses
Gross profit
Income from operations
Loss from operations
Manufacturing margin
Sales
Selling and administrative expenses
Variable cost of goods manufactured
Variable cost of goods sold
Variable selling and administrative expenses

Prepare an income statement under absorption costing. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Less, Plus or colons (:) will automatically appear if required. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Del Ray Equipment Company

Absorption Costing Income Statement

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2	Cost of goods sold:
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