eBook   Show Me How Question Content Area 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 $1,218,000     Direct labor 522,000     Variable factory overhead 87,000     Fixed factory overhead 130,500   1,957,500   Selling and administrative expenses:     Variable selling and administrative expenses $60,000     Fixed selling and administrative expenses 25,000   85,000   Question Content Area a.  Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc.Absorption Costing Income StatementFor the Month Ended July 31   $Sales   Cost of goods sold   $Gross profit   Selling and administrative expenses   $Operating income   Feedback Area   Feedback   a. Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead. Question Content Area b.  Prepare an income statement according to the variable costing concept. Gallatin County Motors Inc.Variable Costing Income StatementFor 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 blank     Total fixed costs     $Operating income