Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% or capacity during the first month. The following data summarize the results for July: Sales (4,000 units) $2,600,000 Production costs (4,350 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses $1,218,000 522,000 87,000 130,500 1,957,500 $60,000 25,000 85,000 1. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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b. 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 costs
Fixed selling and administrative expenses
Total fixed costs
Operating income
Feedback
✓
VA
100
Transcribed Image Text:b. 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 costs Fixed selling and administrative expenses Total fixed costs Operating income Feedback ✓ VA 100
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 (4,000 units)
$2,600,000
Production costs (4,350 units):
Direct materials
Direct labor
Variable factory overhead
Fixed factory overhead
Selling and administrative expenses:
Variable selling and administrative expenses
Fixed selling and administrative expenses
Sales
Cost of goods sold
$1,218,000
522,000
87,000
130,500 1,957,500
a. Prepare an income statement according to the absorption costing concept.
Gallatin County Motors Inc.
Absorption Costing Income Statement
For the Month Ended July 31
Gross profit
Selling and administrative expenses
$60,000
25,000
2,135,000 X
1.478.400 X
85,000
656,600 X
74.400 X
Transcribed Image Text: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 (4,000 units) $2,600,000 Production costs (4,350 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses Sales Cost of goods sold $1,218,000 522,000 87,000 130,500 1,957,500 a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 Gross profit Selling and administrative expenses $60,000 25,000 2,135,000 X 1.478.400 X 85,000 656,600 X 74.400 X
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