Income Statements under Absorption Costing and Variable Costing

If required, round interim per$-$unit calculations to the nearest cent.

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

a$.$ Prepare an income statement according to the absorption costing concept.

Crazy Mountain Sports Inc.

Absorption Costing Income Statement

For the Month Ended July $31$

b$.$ Prepare an income statement according to the variable costing concept.

Crazy Mountain Sports Inc.

Variable Costing Income Statement

For the Month Ended July $31$

c$.$ What is the reason for the difference in the amount of operating income reported in $($a$)$ and $($b$)?$

higher operating income.