Reference no: EM132502571

Income Statements under Absorption and Variable Costing

Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August:

Sales (13,000 units) $2,080,000

Production costs (17,000 units):

Direct materials. $1,006,400

Direct labor 482,800

Variable factory overhead 241,400

Fixed factory overhead 161,500 1,892,100

Selling and administrative expenses:

Variable selling and administrative expenses $293,300

Fixed selling and administrative expenses 113,500 406,800

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

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

• Shawnee Motors Inc.Absorption Costing Income StatementFor the Month Ended August 31
• Sales: $?
• Cost of goods sold: ?
• Gross profit: $?
• Selling and administrative expenses: ?
• Income from operations: $?

Question b. Prepare an income statement according to the variable costing concept.

• Shawnee Motors Inc.Variable Costing Income StatementFor the Month Ended August 31
• Sales: $
• Variable cost of goods sold: ?
• Manufacturing margin: $?
• Variable selling and administrative expenses: ?
• Contribution margin: $?
• Fixed costs:
• Fixed factory overhead: $?
• Fixed selling and administrative expenses: ?
• Total fixed costs: ?
• Income from operations: $?