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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: 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 differences in operating income in (1) and (2) for June. 4. Based on your answers to (1) and (2), did Big Sky Creations Company operate more profitably in May or in June? Explain..

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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: 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 differences in operating income in (1) and (2) for June. 4. Based on your answers to (1) and (2), did Big Sky Creations Company operate more profitably in May or in June? Explain.

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