eBook Show Me How Income Statements under Absorption and Variable Costing Shawnice 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 summarire the results for August: Sales (13,000 units) $2,080,000 Production costs (17,000 units): Direct materials $1,006,400 Direct labor 482,800 Variable factory overhead 241,400 Fixed factory overhead 161,500 1,892,100 Selling and administrative expenses: Variable selling and administrative expenses $293,300 Fixed selling and administrative expenses 113,500 406,800 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept Shawnee Motors Inc. Absorption Costing Income Statement For the Month Ended August 31 Sales 1,000,000 Cost of poods sold Gross profit Selling and administrative expenses Income from operations Check My Work more Check My Works remaining Next > eBook Show Me How Gross profit Selling and administrative expenses Income from operations 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 c. What is the reason for the difference in the amount of income from operations reported in (a) and (b)? method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under of the fived 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 Under the all Check My Work more Check My Work uses remaining Next >