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9-23 Variable and absorption costing, explaining operating-income differences. EntertainMe Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January,
9-23 Variable and absorption costing, explaining operating-income differences. EntertainMe Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows: Unit data: Beginning inventory Production Sales Variable costs: Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: Manufacturing costs Operating (marketing) costs January 0 1,500 1,350 $ 1,000 $ 800 $525,000 $130,000 February 150 1,400 1,400 $ 1,000 $ 800 $525,000 $130,000 March 150 1,520 1,530 $ 1,000 $ 800 $525,000 $130,000 The selling price per unit is $3,300. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,500 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. 1. Prepare income statements for EntertainMe in January, February, and March 2017 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. Catertain
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