1. Absorption and Variable Costing Income Statements

   During the first month of operations ended July 31, YoSan Inc. manufactured 9,900 flat panel televisions, of which 9,100 were sold. Operating data for the month are summarized as follows:

   Sales		$1,638,000
   Manufacturing costs:
   Direct materials	$841,500
   Direct labor	247,500
   Variable manufacturing cost	217,800
   Fixed manufacturing cost	108,900	1,415,700
   Selling and administrative expenses:
   Variable	$127,400
   Fixed	58,600	186,000

   Required:

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

   YoSan Inc.
   Absorption Costing Income Statement
   For the Month Ended July 31
   		$
   Cost of goods sold:
   	$
   		$
   		$

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

   YoSan Inc.
   Variable Costing Income Statement
   For the Month Ended July 31
   		$
   Variable cost of goods sold:
   	$
   		$
   		$
   Fixed costs:
   	$
   		$

   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.