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Instructions During the first month of operations ended May 31, Big Sky Creations Company produced 56,000 designer cowboy boots, of which 52,000 were sold. Operating data for the month are summarized as follows: 1 Sales 2 Manufacturing costs: Direct materials Direct labor 3 4 5 Variable manufacturing cost Fixed manufacturing cost 7 Selling and administrative expenses: Variable 6 8 9 Fixed $408,800.00 128,800.00 61,600.00 56,000.00 $31,200.00 26,000.00 $858,000.00 655,200.00 X 57,200.00

During the first month of operations ended May 31, Bg Sky Creations Company produced 56,000 designer cowboy toots, of which 52,000 wore sold. Opersting data for the month are nummarized as follows: During June, Big Sky Creations produced 48,000 designer cowboy boots and sold 52,000 cowboy boots. Operating data for June are summarized as follows: Required: 1. Using the absorption costing concept, prepare income statements for (a) May and (b) June. 2. Using the variable costing concept, prepare income statements for (a) May and (b) June. 3a. Explain the reason for the differences in operating income in (1) and (2) for May. 3b. Explain the reason for the dilferences in operating income in (1) and (2) for June. 4. Based on vour answers to (1) and (2), did Bia Sky Creations Comoanv operate more orofitably in Mavor in vune? Exolain Labels and Amount Descriptions Labels June 30 Cost of goods sold Fixed costs For the Month Ended June 30 For the Month Ended May 31 May 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 Operating income Inventory, June 1 Inventory, May 31 -abels and Amount Descriptions Cost of goods manufactured Fixed manufacturing costs Fixed selling and administrative expenses Gross profit Operating income Inventory, June 1 Inventory, May 31 Operating loss 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 1a. Using the absorption costing concept, prepare income statements for May. Income Statement Instructions 1b. Using the absorption costing concept, prepare income statements for June. 2a. Using the variable costing concept, prepare income statements for May. Income Statement Instructions 2b. Using the variable costing concept, prepare income statements for June. Income Statement Instructions

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