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Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April...

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Accounting

Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May

2020 are as follows:

A

B

C

1

April

May

2

Unit data:

3

Beginning inventory

0

150

4

Production

500

400

5

Sales

350

520

6

Variable costs:

7

Manufacturing cost per unit produced

$10,000

$10,000

8

Operating (marketing) cost per unit sold

3,000

3,000

9

Fixed costs:

10

Manufacturing costs

$2,000,000

$2,000,000

11

Operating (marketing) costs

600,000

600,000

The selling price per vehicle is $24,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 500 units. There are noprice, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs.

1.

 Prepare April and May

2020

income statements for

Nascar

Motors under (a) variable costing and (b) absorption costing.

2.

Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing.

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