In: Accounting
Frigid Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1, 2016, and operated at 100% of capacity during the first month. The following data summarize the results for July:
1 |
Sales (33,000 units) |
$8,250,000.00 |
|
2 |
Production costs (40,500 units): |
||
3 |
Direct materials |
$3,240,000.00 |
|
4 |
Direct labor |
1,822,500.00 |
|
5 |
Variable factory overhead |
1,012,500.00 |
|
6 |
Fixed factory overhead |
607,500.00 |
6,682,500.00 |
7 |
Selling and administrative expenses: |
||
8 |
Variable selling and administrative expenses |
$1,160,000.00 |
|
9 |
Fixed selling and administrative expenses |
230,000.00 |
1,390,000.00 |
Required: | |||
A. | Prepare an income statement according to the absorption costing concept.* | ||
B. | Prepare an income statement according to the variable costing concept. A colon (:) will automatically appear if it is required.* | ||
C. | What is the reason for the difference in the amount of income
from operations reported in (A) and (B)?
|