Question

i se the results for Income Statements under Absorption Conting and Variable Casting in County Motors Inc. assemblies and snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data w Sales (4.000 units) $2.600,000 Productions (4.350 units) Direct $1.218.000 Direct labor 522.000 Variable factory overhead Food factory overhead 130,500 1,957,500 ding and administrative expenses Variable selling and administrative expenses Fored selling and administrative expenses 25.000 3.000 ) .. tong con recome a n according to the Galatinatuto in Absorption Casting a nd Sales Cast of sold Sagad

Answer 1

Ans.	Gallatin County Motors Inc
	Absorption Costing Income Statement
	For the Month Ended July 31
	Sales	$2,600,000
	Cost of goods sold	$1,800,000
	Gross profit	$800,000
	Selling and administrative expenses	$85,000
	Operating income	$715,000
	*Calculations for Cost of goods sold:
	Cost of goods sold = Cost of goods manufactured / Units produced * Units sold
	$1,957,500 / 4,350 * 4,000
	$1,800,000
Ans. 2	Gallatin County Motors Inc
	Variable Costing Income Statement
	For the Month Ended July 31
	Sales		$2,600,000
	Variable cost of goods sold		$1,680,000
	Manufacturing margin		$920,000
	Variable selling and administrative expenses		$60,000
	Contribution margin		$860,000
	Fixed costs:
	Fixed factory overhead costs	$130,500
	Fixed selling and administrative expenses	$25,000
	Total fixed costs		$155,500
	Operating income		$704,500
	*Calculations for cost of goods manufactured:
	Direct materials	$1,218,000
	Direct labor	$522,000
	Variable factory overhead	$87,000
	Total variable cost of goods manufactured	$1,827,000
	*Calculations for Cost of goods sold:
	Cost of goods sold = Variable Cost of goods manufactured / Units produced * Units sold
	$1,827,000 / 4,350 * 4,000
	$1,680,000