Absorption and Variable Costing Income Statements

During the first month of operations ended July 31, YoSan Inc. manufactured 8,900 flat panel televisions, of which 8,400 were sold. Operating data for the month are summarized as follows:

Sales		$1,218,000
Manufacturing costs:
Direct materials	$605,200
Direct labor	178,000
Variable manufacturing cost	151,300
Fixed manufacturing cost	80,100	1,014,600
Selling and administrative expenses:
Variable	$100,800
Fixed	46,400	147,200

Required:

1. Prepare an income statement based on the absorption costing concept.

YoSan Inc.
Absorption Costing Income Statement
For the Month Ended July 31
Sales		$fill in the blank 12f279009ffffe8_2
Cost of goods sold:
	$fill in the blank 12f279009ffffe8_4
	fill in the blank 12f279009ffffe8_6
		fill in the blank 12f279009ffffe8_8
		$fill in the blank 12f279009ffffe8_10
		fill in the blank 12f279009ffffe8_12
		$fill in the blank 12f279009ffffe8_14

2. Prepare an income statement based on the variable costing concept.

YoSan Inc.
Variable Costing Income Statement
For the Month Ended July 31
		$fill in the blank ea97e5fd2f8bfb5_2
Variable cost of goods sold:
	$fill in the blank ea97e5fd2f8bfb5_4
	fill in the blank ea97e5fd2f8bfb5_6
		fill in the blank ea97e5fd2f8bfb5_8
		$fill in the blank ea97e5fd2f8bfb5_10
		fill in the blank ea97e5fd2f8bfb5_12
		$fill in the blank ea97e5fd2f8bfb5_14
Fixed costs:
	$fill in the blank ea97e5fd2f8bfb5_16
	fill in the blank ea97e5fd2f8bfb5_18
		fill in the blank ea97e5fd2f8bfb5_20
		$fill in the blank ea97e5fd2f8bfb5_22

3. Explain the reason for the difference in the amount of operating income reported in (1) and (2).

The operating income reported under costing exceeds the operating income reported under costing, due to manufacturing costs that are deferred to a future month under costing.