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.
Answer & Explanation
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