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managerial 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 (35,000 units)

$8,750,000.00

2

Production costs (42,500 units):

3

Direct materials

$4,250,000.00

4

Direct labor

2,125,000.00

5

Variable factory overhead

1,062,500.00

6

Fixed factory overhead

637,500.00

8,075,000.00

7

Selling and administrative expenses:

8

Variable selling and administrative expenses

$1,150,000.00

9

Fixed selling and administrative expenses

200,000.00

1,350,000.00

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)?

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