During the first month of operations ended August 31, KodiakFridgeration Company manufactured 40,000 mini refrigerators, ofwhich 36,000 were sold. Operating data for the month are summarizedas follows:

1	Sales		$8,280,000.00
2	Manufacturing costs:
3	Direct materials	$2,800,000.00
4	Direct labor	1,200,000.00
5	Variable manufacturing cost	800,000.00
6	Fixed manufacturing cost	440,000.00	5,240,000.00
7	Selling and administrative expenses:
8	Variable	$540,000.00
9	Fixed	216,000.00	756,000.00

	Required:
1.	Prepare an income statement based on the absorption costingconcept.*
2.	Prepare an income statement based on the variable costingconcept.*
3.	Explain the reason for the difference in the amount of incomefrom operations reported in (1) and (2). * Refer to the lists of Labels and Amount Descriptions for theexact wording of the answer choices for text entries. Be sure tocomplete the statement heading. A colon (:) will automaticallyappear if required. Enter Inventory, August 31 as a negative numberusing a minus sign. If a net loss is incurred, enter that amount asa negative number using a minus sign.

Prepare an income statement based on the absorption costingconcept. Refer to the lists of Labels and Amount Descriptions forthe exact wording of the answer choices for text entries. Be sureto complete the statement heading. A colon (:) will automaticallyappear if required. Enter Inventory, August 31 as a negative numberusing a minus sign. If a net loss is incurred, enter that amount asa negative number using a minus sign.

Kodiak Fridgeration Company

Absorption Costing Income Statement

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Prepare an income statement based on the variable costingconcept. Refer to the lists of Labels and Amount Descriptions forthe exact wording of the answer choices for text entries. Be sureto complete the statement heading. A colon (:) will automaticallyappear if required. Enter Inventory, August 31 as a negative numberusing a minus sign. If a net loss is incurred, enter that amount asa negative number using a minus sign.

Kodiak Fridgeration Company

Variable Costing Income Statement

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Labels
August 31
Cost of goods sold
Fixed costs
For the Month Ended August 31
Variable cost of goods sold
Amount Descriptions
Contribution margin
Contribution margin ratio
Cost of goods manufactured
Fixed manufacturing costs
Fixed selling and administrative expenses
Gross profit
Income from operations
Inventory, August 31
Loss from operations
Manufacturing margin
Planned contribution margin
Sales
Sales mix
Selling and administrative expenses
Total cost of goods sold
Total fixed costs
Total variable cost of goods sold
Variable cost of goods manufactured
Variable selling and administrative expenses