Solution-Prepare an income statement according to variable

Prepare an income statement according to variable costing

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Reference no: EM133119102

Question - 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 (12,500 units)		$1,250,000
Production costs (16,000 units):
Direct materials	$592,000
Direct labor	284,800
Variable factory overhead	142,400
Fixed factory overhead	94,400	1,113,600
Selling and administrative expenses:
Variable selling and administrative expenses	$172,600
Fixed selling and administrative expenses	66,800	239,400

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

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 operating income reported in (a) and (b)?

Reference no: EM133119102

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Prepare an income statement according to variable costing

Reference no: EM133119102

Reference no: EM133119102

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