Shawnee Motors Inc. assembles and sells snowmobile engines. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August:

1	Sales (38,000 units)		$9,500,000.00
2	Production costs (44,500 units):
3	Direct materials	$3,560,000.00
4	Direct labor	2,002,500.00
5	Variable factory overhead	1,112,500.00
6	Fixed factory overhead	667,500.00	7,342,500.00
7	Selling and administrative expenses:
8	Variable selling and administrative expenses	$1,130,000.00
9	Fixed selling and administrative expenses	245,000.00	1,375,000.00

Required:

a.

Prepare an income statement according to the absorption costing concept.*

b.

Prepare an income statement according to the variable costing concept.*

c.

What is the reason for the difference in the amount of income from operations reported in (a) and (b)?

* 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. Enter all amounts as positive numbers.