Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1...

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Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: Sales (12,500 units) Production costs (15,000 units): Direct materials Direct labor $1,800,000 1,275,000 $6,250,000 Variable factory overhead 225,000 Fixed factory overhead 600,000 3,900,000 Selling and administrative expenses: Variable selling and administrative expenses $ 125,000 Fixed selling and administrative expenses 45,000 170,000 a. Prepare an income statement according to the absorption costing concept. SHOW ANSWER 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)? Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: Sales (12,500 units) Production costs (15,000 units): Direct materials Direct labor $1,800,000 1,275,000 $6,250,000 Variable factory overhead 225,000 Fixed factory overhead 600,000 3,900,000 Selling and administrative expenses: Variable selling and administrative expenses $ 125,000 Fixed selling and administrative expenses 45,000 170,000 a. Prepare an income statement according to the absorption costing concept. SHOW ANSWER 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)?

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a Income Statement Absorption Costing Concept Sales Revenue 6250000 Cost of Goods Sold Direct Materi... View the full answer