Question

During the first month of operations ended May 31, Big Sky Creations Company produced 55,750 designer cowboy boots, of which 52,650 were sold. Operating data for the month are summarized as follows:

1	Sales		$789,750.00
2	Manufacturing costs:
3	Direct materials	$395,825.00
4	Direct labor	117,075.00
5	Variable manufacturing cost	61,325.00
6	Fixed manufacturing cost	55,750.00	629,975.00
7	Selling and administrative expenses:
8	Variable	$26,325.00
9	Fixed	26,325.00	52,650.00

During June, Big Sky Creations produced 49,550 designer cowboy boots and sold 52,650 cowboy boots. Operating data for June are summarized as follows:

1	Sales		$789,750.00
2	Manufacturing costs:
3	Direct materials	$351,805.00
4	Direct labor	104,055.00
5	Variable manufacturing cost	54,505.00
6	Fixed manufacturing cost	55,750.00	566,115.00
7	Selling and administrative expenses:
8	Variable	$26,325.00
9	Fixed	26,325.00	52,650.00

	Required:
1.	Using the absorption costing concept, prepare income statements for (a) May and (b) June.*

PD: I already saw 2 people asking the same questions and the answer says that the profit for may is 142155 and june is 139505.96 and both are wrong.

Answer 1

Income Statement
	May	June
Sales	$ 789,750	$ 789,750
Less:
Cost of Goods Sold
Beginning finished goods inventory	0	35,030
Add: Cost of Goods Manufactured	629,975	566,115
Cost of Goods Available for Sale	629,975	601,145
Less: Ending finished goods inventory	( 35,030)	0
Cost of Goods Sold	594,945	601,145
Gross Profit	194,805	188,605
Selling and Administrative Expenses
Variable	26,325	26,325
Fixed	26,325	26,325
Total Selling and Administrative Expenses	52,650	52,650
Net Operating Income	$ 142,155	$ 135,955