During the first month of operations ended May 31, 2014, Ice Cold Fridge Company manufactured 17,500 dormitory refrigerators, of which 16,380 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: $4,095,000 Direct materials... $2065,000 612,500 525,000 262,500 Fixed manufacturing cost . Selling and administrative expenses: 3,465,000 327,600 147 420 Fixed 475,020