Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended July 31, Head Gear Inc. manufactured 32,800 hats, of which 31,200 were sold. Operating data for the month are summarized as follows: Sales $255,840 Manufacturing costs: Direct materials $154,160 Direct labor 39,360 Variable manufacturing cost 19,680 16,400 229,600 Fixed manufacturing cost Selling and administrative expenses: Variable $12,180 Fixed 9,110 21,590 During August, Head Gear Inc. manufactured 29,600 hats and sold 31,200 hats. Operating data for August are summarized as follows: Sales $255,840 Manufacturing costs: Direct materials Direct labor Variable manufacturing cost Fixed manufacturing cost Selling and administrative expenses: Variable $139,120 35,520 17,760 16,400 208,000 $12,480 9,110 Fixed 21,590 Required: 2a. Prepare Income statement for July using the variable costing concept. Head Gear Inc. Variable Costing Income Statement For the Month Ended July 31 Sales # 255,840 Variable cost goods sold: Variable cost of goods manufactured Inventory, July 31 Total variable cost of goods sold x Manufacturing margin X Variable selling and administrative expenses Contribution margin $ Fixed costs Fixed manufacturing costs $ 8 Fixed selling and administrative expenses Total fixed costs Operating income $ 2b. Prepare income statement for August using the variable costing concept. Head Gear Inc. Variable Costing Income Statement For the Month Ended August 31 Sales # X Fixed manufacturing costs Fixed selling and administrative expenses X Total fixed costs X Operating income $ 2b. Prepare Income statement for August using the variable costing concept. Head Gear Inc. Variable Costing Income Statement For the Month Ended August 31 Sales X Variable cost of goods sold: Inventory, August 1 Variable cost of goods manufactured X Total variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Accounting numeric field Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs Operating income