During the first month of operations ended May 31, 2010, Dorm Room Appliance Company manufactured 10,300 microwaves, of which 9,700 were sold. Operating data for the month are summarized as follows:

Instructions
1. Prepare an income statement based on the absorption costing concept.
2. Prepare an income statement based on the variable costing concept.
3. Explain the reason for the difference in the amount of income from operations reported in (1) and(2).

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Sales Manufacturing costs: $1,455,000 Direct materials Direct labor. Variable manufacturing cost Fixed manufacturing cost..- $721,000 . 216,300 185,400 . ..92,700 1,215,400 Selling and administrative expenses: Variable Fixed . $116,400 .53,350 169,750