9-18

ClearView Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2014 are as follows:

	January	February	March
Unit data
Beginning inventory	0	150	150
Production	1000	950	1030
Sales	850	950	1040
Variable costs
Manufacturing cost per unit produced	$650	$650	$650
Operating (marketing) cost per unit sold	$500	$500	$500
Fixed costs
Manufacturing costs	$390,000	$390,000	$390,000
Operating (marketing) costs	$180,000	$180,000	$180,000

The selling price per unit is $3,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,000 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs.

requirements:

1.Prepare income statements for ClearView in January, February, and March 2014 under (a) variable costing and (b) absorption costing.

2. Explain the difference in operating income for January, February, and March under variable costing and absorption costing.