Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended January 31, 2015, Hip and Conscious Clothing Company produced 55,500 designer cowboy hats, of which 51,450 were sold.

During the first month of operations ended January 31, 2015, Hip and Conscious Clothing Company produced 55,500 designer cowboy hats, of which 51,450 were sold. Operating data for the month are summarized as follows: Sales…………………………………………….. $771,750 Manufacturing costs: Direct Materials……………………471,750 Direct labor ………………………127,650 Variable manufacturing costs………… 61,050 Fixed manufacturing costs…………… 55,500 $715,950 Selling and administrative expenses: variable…………………………..36,015 fixed……………………………..25,725 $61,740 During February Hip and Conscious Clothing produced 47,400 designer cowboy hats and sold 51,450 cowboy hats. Operating data for February as summarized as follows: Sales…………………………………………….. $771,750 Manufacturing costs: Direct Materials……………………402,900 Direct labor ………………………109,020 Variable manufacturing costs………… 52,140 fixed manufacturing costs…………… 55,500 $619,560 Selling and administrative expenses: variable…………………………..36,015 fixed……………………………..25,725 $61,740 1. Using absorption costing method, prepare income statements for (a) January and (b) February. 2.Using variable costing method, prepare income statements for (a) January and (b) February.