On October 31, the end of the first month of operations, Morristown & Co. prepared the following income statement based on absorption costing:

Morristown & Co.

Absorption Costing Income Statement

For Month Ended October 31, 20-

1	Sales (2,600 units)		$117,000.00
2	Cost of goods sold:
3	Cost of goods manufactured	$85,500.00
4	Less ending inventory (400 units)	11,400.00
5	Cost of goods sold		74,100.00
6	Gross profit		$42,900.00
7	Selling and administrative expenses		21,500.00
8	Income from operations		$21,400.00

On October 31, the end of the first month of operations, Morristown & Co. prepared the following income statement based on absorption costing:

Morristown & Co.

Absorption Costing Income Statement

For Month Ended October 31, 20-

1	Sales (2,600 units)		$117,000.00
2	Cost of goods sold:
3	Cost of goods manufactured	$85,500.00
4	Less ending inventory (400 units)	11,400.00
5	Cost of goods sold		74,100.00
6	Gross profit		$42,900.00
7	Selling and administrative expenses		21,500.00
8	Income from operations		$21,400.00

If the fixed manufacturing costs were $42,900 and the variable selling and administrative expenses were $14,600, prepare an income statement using variable 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. A colon (:) will automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign.

X Labels and Amount Descriptions

Labels

Fixed costs

For Month Ended October 31, 20-

Amount Descriptions

Contribution margin

ending inventory

Fixed manufacturing costs

Fixed selling and administrative expenses

Income from operations

Manufacturing margin

Sales

Variable cost of goods manufactured

Variable cost of goods sold

Variable selling and administrative expenses

X Variable Costing Income Statement If the fixed manufacturing costs were $42,900 and the variable selling and administrative expenses were $14,600, prepare an income statement using variable 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. A colon (:) will automatically appear if it is required. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Morristown & Co.

Variable Costing Income Statement

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2	Variable cost of goods sold:
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