11. Gallatin 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:   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.* c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)?   * Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive.

Question
11. Gallatin 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:
 
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.*
c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)?
  * Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. Enter amounts as positive numbers unless the amount is a calculation that results in a negative amount. For example: Net loss should be negative. Expenses should be positive.

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