During the first month of operations ended May 31, 2012, Dorm Fridge Company manufactured 12,500 microwaves, of which 11,700 were sold. Operating data for the month are summarized as follows:

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: Direct materials. Direct labor Variable manufacturing cost Fixed manufacturing cost Selling and administrative expenses: $2,106,000 $1,050,000 312,500 268,750 137,500 1,768,750 $ 169,650 76,050 Variable Fixed 245,700