8:20CostingGallatin County Motors Inc. assembles and sellssnowmobile engines. The company began operations onJuly 1 and operated at 100% of capacity during the firstmonth. The following data summarize the results for July:$1,450,000Sales (14,500 units)Production costs (19,000 units):Direct materialsDirect laborVariable factory overheadFixed factory overheadSelling and administrative expenses:Variable selling and administrative expensesFixed selling and administrative expensesSales✔Cost of goods sold ✔Gross profit ✓Selling and administrative expensesIf required, round interim per-unit calculations to thenearest cent.Gallatin County Motors Inc.Absorption Costing Income StatementFor the Month Ended July 311,450,000Operating income ✓a. Prepare an income statement according to theabsorption costing concept.$703,000338,200169,100112,100 1,322,400$205,00079,300FeedbackAACheck My Work.LTE1,322,400 X284,300284,300a. Under absorption costing, the cost of goodsmanufactured includes direct materials, direct labor,and factory overhead costs. Both fixed and variablefactory costs are included as part of factory overhead.b. Prepare an income statement according to the variablecosting concept.Gallatin County Motors Inc.Variable Costing Income StatementFor the Month Ended July 31v2.cengagenow.com 8:20Check My Worka. Under absorption costing, the cost of goodsmanufactured includes direct materials, direct labor,and factory overhead costs. Both fixed and variablefactory costs are included as part of factory overhead.b. Prepare an income statement according to the variablecosting concept.Sales ✓Variable cost of goods soldManufacturing margin ✓Variable selling and administrative expensesContribution margin ✔Gallatin County Motors Inc.Variable Costing Income StatementFor the Month Ended July 31Fixed costs:Fixed factory overhead costs ▾ ✓Fixed selling and administrative expensesTotal fixed costs ✔Operating incomeAAFeedbackcosts.112,100.LTE79.3001,450,000205,000✓ Check My Workb. Under variable costing, the cost of goodsmanufactured includes only variable manufacturingv2.cengagenow.com191,400c. What is the reason for the difference in the amount ofoperating income reported in (a) and (b)?Under the absorption costing method, the fixedmanufacturing cost included in the cost of goods sold ismatched with the revenues. Under variable costing ✓, all ofthe fixed manufacturing cost is deducted in the period inwhich it is incurred, regardless of the amount of inventorychange. Thus, when inventory increases, theabsorption costing ✔ income statement will have a higheroperating income.Ć

Name: 8:20CostingGallatin County Motors Inc. assembles and sellssnowmobile
Uploaded: 2024-03-20T06:33:06.000Z
Channel: Bartleby
Description: 8:20CostingGallatin County Motors Inc. assembles and sellssnowmobile engines. The company began operations onJuly 1 and operated at 100% of capacity during the firstmonth. The following data summarize the results for July:$1,450,000Sales (14,500 uni