Reference no: EM132971580

Income Statements under Absorption Costing and Variable Costing

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

Sales (18,000 units) $2,160,000

Production costs (23,000 units):

Direct materials$1,021,200

Direct labor489,900

Variable factory overhead246,100

Fixed factory overhead163,300

1,920,500

Selling and administrative expenses:

Variable selling and administrative expenses$297,700

Fixed selling and administrative expenses115,200

412,900

If required, round interim per-unit calculations to the nearest cent.

Problem a. Prepare an income statement according to the absorption costing concept.