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 (16,500 units) $1,980,000 Production costs (21,000 units): Direct materials $932,400 Direct labor 447,300 Variable factory overhead 224,700 Fixed factory overhead 149,100 1,753,500 Selling and administrative expenses: Variable selling and administrative expenses $271,800 Fixed selling and administrative expenses 105,200 377,000 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 Sales $__ Cost of goods sold Gross profit $_ Selling and administrative expenses _ Operating income $ Prepare an income statement according to the variable costing concept. Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31 SALES $_ VARIABLE COST OF GOODS SOLD MANUFACTURING MARGIN $ VARIABLE SELLING AND ADMINISTRATIVE EXPENSES CONTRIBUTION MARGIN $ Fixed costs: FIXED FACTORY OVERHEAD COST $ FIXED SELLING AND ADMINISTRATIVE EXPENSES $ TOTAL FIXED COSTS $ OPERATING INCOME $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 (16,500 units)		$1,980,000
Production costs (21,000 units):
Direct materials	$932,400
Direct labor	447,300
Variable factory overhead	224,700
Fixed factory overhead	149,100		1,753,500
Selling and administrative expenses:
Variable selling and administrative expenses	$271,800
Fixed selling and administrative expenses	105,200		377,000

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

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

Prepare an income statement according to the absorption costing concept.

Gallatin County Motors Inc.
Absorption Costing Income Statement
For the Month Ended July 31

	Sales $______
	Cost of goods sold ________
	Gross profit $_________
	Selling and administrative expenses _______
	Operating income $________

Prepare an income statement according to the variable costing concept.

Gallatin County Motors Inc.
Variable Costing Income Statement
For the Month Ended July 31

SALES		$_______
VARIABLE COST OF GOODS SOLD
MANUFACTURING MARGIN		$
VARIABLE SELLING AND ADMINISTRATIVE EXPENSES
CONTRIBUTION MARGIN		$
Fixed costs:
FIXED FACTORY OVERHEAD COST	$
FIXED SELLING AND ADMINISTRATIVE EXPENSES	$
TOTAL FIXED COSTS		$
OPERATING INCOME		$