Question
Accelerate Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2020 are as follows: The selling price
Accelerate Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2020 are as follows:
The selling price per vehicle is $21,000. 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 cost of goods sold in the month in which it occurs.
| A | B | C |
1 |
| April | May |
2 | Unit data: |
|
|
3 | Beginning inventory | 0 | 50 |
4 | Production | 600 | 575 |
5 | Sales | 550 | 595 |
6 | Variable costs: |
|
|
7 | Manufacturing cost per unit produced | $11,500 | $11,500 |
8 | Operating (marketing) cost per unit sold | 3,600 | 3,600 |
9 | Fixed costs: |
|
|
10 | Manufacturing costs | $2,400,000 | $2,400,000 |
11 | Operating (marketing) costs | 750,000 | 750,000 |
1. | Prepare April and May 2020 income statements for Accelerate 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. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started