Absorption and Variable Costing Income Statements

During the first month of operations ended July 31, YoSan Inc. manufactured 9,700 flat panel televisions, of which 9,000 were sold. Operating data for the month are summarized as follows:

Sales		$1,305,000
Manufacturing costs:
Direct materials	$659,600
Direct labor	194,000
Variable manufacturing cost	164,900
Fixed manufacturing cost	87,300	1,105,800
Selling and administrative expenses:
Variable	$108,000
Fixed	49,700	157,700

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 _______

Cost of goods sold:

Cost of goods manufactured ____________

Inventory, July 31 _____________

Total cost of goods sold ____________

Gross profit______________

Selling and administravice expenses __________

Income from operations _______________

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

YoSan Inc.

Variable Costing Income Statement

For the Month Ended July 31

Sales ___________-

Variable cost of goods sold:

Variable cost of goods manufactured ___________

Inventory, July 31___________

Total variable cost of goods sold ____________

Manufacturing margin _____________

Variable selling and administrative expenses ________________

Contribution margin _____________

Fixed costs:

Fixed manufacturing costs _____________

Fixed selling and administrative expenses ____________

Total fixed costs _________________

Income from operations ______________