Beach Motors Inc. assembles and sells Dune Buggy engines. The company began operations on July 1, 2014, and operated at 100% of capacity during the first month. The following data summarize the results for July:

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 income from operations reported in (a) and(b)?

9,00000 Production costs (40500 units): $4,495,500 729,000 8,505,000 Selling and administrative expenses: Variable selling and administrative expenses...........................$1,260,000 225,000 Fixed selling and administrative expenses.... 1,435,000