FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Gallatin county motors inc. assembled 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:
1 Sales (32,000 units)
$8,000,000.00
2 Production costs (41,000 units):
Direct materials
$3,280,000.00
3
4
Direct labor
2,255,000.00
Variable factory overhead
1,025,000.00
6.
Fixed factory overhead
615,000.00
7,175,000.00
7 Selling and administrative expenses:
Variable selling and administrative expenses
$1,180,000.00
Fixed selling and administrative expenses
210,000.00
1,390,000.00
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Transcribed Image Text:1 Sales (32,000 units) $8,000,000.00 2 Production costs (41,000 units): Direct materials $3,280,000.00 3 4 Direct labor 2,255,000.00 Variable factory overhead 1,025,000.00 6. Fixed factory overhead 615,000.00 7,175,000.00 7 Selling and administrative expenses: Variable selling and administrative expenses $1,180,000.00 Fixed selling and administrative expenses 210,000.00 1,390,000.00
Required:
a. Prepare an income statement according to the absorption costing concept.*
b. Prepare an income statement according to the variable costing concept.*
C. What is the reason for the difference in the amount of Operating income reported in (a) and (b)?
* Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer
choices for text entries. A colon () will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a
calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive.
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Transcribed Image Text:Required: a. Prepare an income statement according to the absorption costing concept.* b. Prepare an income statement according to the variable costing concept.* C. What is the reason for the difference in the amount of Operating income reported in (a) and (b)? * Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon () will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive.
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