Absorption and Variable Costing Income Statements

During the first month of operations ended July 31, YoSan Inc. manufactured 9,200 flat panel televisions, of which 8,500 were sold. Operating data for the month are summarized as follows:

Sales		$1,530,000
Manufacturing costs:
Direct materials	$782,000
Direct labor	230,000
Variable manufacturing cost	202,400
Fixed manufacturing cost	101,200	1,315,600
Selling and administrative expenses:
Variable	$119,000
Fixed	54,700	173,700

Required:

Question Content Area

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. 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