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

Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2017 are as follows:

	April	May
Unit data:
Beginning inventory	0	50
Production	600	525
Sales	550	545
Variable costs:
Manufacturing cost per unit produced	$9,000	$9,000
Operating (marketing) cost per unit sold	4,000	4,000
Fixed costs:
Manufacturing costs	$2,250,000	$2,250,000
Operating (marketing) costs	725,000	725,000

The selling price per vehicle is $29,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 600 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to the cost of goods sold in the month in which it occurs.

Prepare April and May 2017 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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Expert Solution

ekkarill92 answered 1 year ago

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