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 (13,500 units) $1,755,000 Production costs (17,000 units): Direct materials $817,700 Direct labor 392,700 Variable factory overhead 195,500 Fixed factory overhead 130,900 1,536,800 Selling and administrative expenses: Variable selling and administrative expenses $238,200 Fixed selling and administrative expenses 92,200 330,400 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 $fill in the blank f4f54b00d04e04c_2 fill in the blank f4f54b00d04e04c_4 $fill in the blank f4f54b00d04e04c_6 fill in the blank f4f54b00d04e04c_8 $fill in the blank f4f54b00d04e04c_10 b. Prepare an income statement according to the variable costing concept. Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31 $fill in the blank 67041d087038fff_2 fill in the blank 67041d087038fff_4 $fill in the blank 67041d087038fff_6 fill in the blank 67041d087038fff_8 $fill in the blank 67041d087038fff_10 Fixed costs: $fill in the blank 67041d087038fff_12 fill in the blank 67041d087038fff_14 fill in the blank 67041d087038fff_16 $fill in the blank 67041d087038fff_18 c. What is the reason for the difference in the amount of operating income reported in (a) and (b)? Under the ________ method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under ________ , all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the __________ income statement will have a higher operating income.

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 (13,500 units) $1,755,000 Production costs (17,000 units): Direct materials $817,700 Direct labor 392,700 Variable factory overhead 195,500 Fixed factory overhead 130,900 1,536,800 Selling and administrative expenses: Variable selling and administrative expenses $238,200 Fixed selling and administrative expenses 92,200 330,400 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 $fill in the blank f4f54b00d04e04c_2 fill in the blank f4f54b00d04e04c_4 $fill in the blank f4f54b00d04e04c_6 fill in the blank f4f54b00d04e04c_8 $fill in the blank f4f54b00d04e04c_10 b. Prepare an income statement according to the variable costing concept. Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31 $fill in the blank 67041d087038fff_2 fill in the blank 67041d087038fff_4 $fill in the blank 67041d087038fff_6 fill in the blank 67041d087038fff_8 $fill in the blank 67041d087038fff_10 Fixed costs: $fill in the blank 67041d087038fff_12 fill in the blank 67041d087038fff_14 fill in the blank 67041d087038fff_16 $fill in the blank 67041d087038fff_18 c. What is the reason for the difference in the amount of operating income reported in (a) and (b)? Under the method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under , all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the __ income statement will have a higher operating income.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 2E: Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on...

See similar textbooks

Related questions

Concept explainers

Topic Video

Question

Income Statements under Absorption Costing and Variable Costing

Sales (13,500 units)		$1,755,000
Production costs (17,000 units):
Direct materials	$817,700
Direct labor	392,700
Variable factory overhead	195,500
Fixed factory overhead	130,900		1,536,800
Selling and administrative expenses:
Variable selling and administrative expenses	$238,200
Fixed selling and administrative expenses	92,200		330,400

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

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

Gallatin County Motors Inc.
Absorption Costing Income Statement
For the Month Ended July 31
	$fill in the blank f4f54b00d04e04c_2
	fill in the blank f4f54b00d04e04c_4
	$fill in the blank f4f54b00d04e04c_6
	fill in the blank f4f54b00d04e04c_8
	$fill in the blank f4f54b00d04e04c_10

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

Gallatin County Motors Inc.
Variable Costing Income Statement
For the Month Ended July 31
		$fill in the blank 67041d087038fff_2
		fill in the blank 67041d087038fff_4
		$fill in the blank 67041d087038fff_6
		fill in the blank 67041d087038fff_8
		$fill in the blank 67041d087038fff_10
Fixed costs:
	$fill in the blank 67041d087038fff_12
	fill in the blank 67041d087038fff_14
		fill in the blank 67041d087038fff_16
		$fill in the blank 67041d087038fff_18

c. What is the reason for the difference in the amount of operating income reported in (a) and (b)?

Under the ________ method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under ________ , all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the __________ income statement will have a higher operating income.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.