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 (38,000 units) $9,500,000.00 2 Production costs (44,000 units): 3 Direct materials $4,400,000.00 4 Direct labor 1,760,000.00 5 Variable factory overhead 1,100,000.00 6 Fixed factory overhead 660,000.00 7,920,000.00 7 Selling and administrative expenses: 8 Variable selling and administrative expenses $1,170,000.00 9 Fixed selling and administrative expenses 200,000.00 1,370,000.00 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)

a.

income statement according to the absorption costing concept.

Sales                                                                  $9,500,000.00

Less Cost of Sales                                           ($6,840,000.00)

Gross Profit                                                       $2,660,000.00

Less Expenses

Variable selling and administrative expenses ($1,170,000.00)

Fixed selling and administrative expenses       ($200,000.00)

Net Income                                                          $1,290,000.00

b.

income statement according to the variable costing concept

Sales                                                                  $9,500,000.00

Less Cost of Sales                                           ($6,270,000.00)

Contribution                                                      $3,230,000.00

Less Expenses

Fixed factory overhead                                      ($660,000.00)

Variable selling and administrative expenses ($1,170,000.00)

Fixed selling and administrative expenses       ($200,000.00)

Net Income                                                          $1,200,000.00

c.

The difference is due to fixed cost included in closing inventory under the absorption costing concept.

Explanation:

Production Cost - Absorption Costing

Direct materials                                $4,400,000.00

Direct labor                                       $1,760,000.00

Variable factory overhead                $1,100,000.00

Fixed factory overhead                      $660,000.00

Total                                                  $7,920,000.00

therefore,

Cost of Sales = 38,000 units/ 44,000 units x $7,920,000.00

                      = $6,840,000

Production Cost - Variable Costing

Direct materials                                $4,400,000.00

Direct labor                                       $1,760,000.00

Variable factory overhead                $1,100,000.00

Total                                                  $7,260,000.00

therefore,

Cost of Sales = 38,000 units/ 44,000 units x $7,260,000.00

                      = $6,270,000

the answer is: c.that person might be arrested and deported

filling w-4 form incorrectly usually would rise suspicions from government's auditors. when they notice such mistakes, they would send their teams to investigate the situation further.

if those investigation teams believe that the incorrectness is done on purpose (with malicious intent), that person can be arrested or deported

answer; organization;