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b. Prepare an income statement according to the variable costing concept. Gallatin County Motors Inc. Variable Costing Income Statement For the Month Ended July 31 Sales 1,080,000 Variable cost of goods sold 751,500 X Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed factory overhead costs Fixed selling and administrative expenses Total fixed costs Operating income 2Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (12,000 units) $1,080,000 Production costs (15,000 units): Direct materials $499,500 Direct labor 240,000 Variable factory overhead 120,000 Fixed factory overhead 79,500 939,000 Selling and administrative expenses: Variable selling and administrative expenses $145,500 Fixed selling and administrative expenses 56,300 201,800