Income Statements under Absorption Costing and Variable Costing Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: Sales (18,500 units) Production costs (24,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses $1,850,000 $888,000 427,200 213,600 141,600 1,670,400 $258,900 100,200 359,100 If required, round interim per-unit calculations to the nearest cent.

If required, rwand interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept b. Prepore an insome statrment according to the varbble couting concept. C. What is the reasion for the difference in the ambunt of operating income reported in (a) and (b)? Under the Tethod, the foxed manufacturing cost included in the cont of goods toid a matched with the revenues. Under of the fired manufacturing cont is oeducted 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 operating income