Content Area Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (18,000 units) Production costs (23,000 units): $1,800,000 Direct materials Direct labor Variable factory overhead Fixed factory overhead $851,000 409,400 204,700 135,700 1,600,800 Selling and administrative expenses: Variable selling and administrative expenses $248,100 Fixed selling and administrative expenses 96,000 344,100 If required, round interim per-unit calculations to the nearest cent. Question Content Area a. Prepare an income statement according to the absorption costing concept. Shawnee Motors Inc. Absorption Costing Income Statement For the Month Ended August 31 Shawnee Motors Inc. Absorption Costing Income Statement For the Month Ended August 31 < Question Content Area b. Prepare an income statement according to the variable costing concept. Shawnee Motors Inc. Variable Costing Income Statement For the Month Ended August 31 1000 Fixed costs: B Question Content Area b. Prepare an income statement according to the variable costing concept. Shawnee Motors Inc. Variable Costing Income Statement For the Month Ended August 31 Fixed costs: D Question Content Area c. What is the reason for the difference in the amount of income from operations reported in (a) and (b)? Under the method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the income statement will have a higher income from operations than will the variable costing income statement. all