Accelerate 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	500	475
Sales	450	5000
Variable Costs:
Manufacturing cost per unit produced	$ 11,500.00	$ 11,500.00
Operating cost per unit sold	$ 2,200.00	$ 2,200.00
Fixed Costs:
Manufacturing Costs	$ 2,400,000.00	$ 2,400,000.00
Operating Costs	$ 800,000.00	$ 800,000.00

The selling price per vehicle is $23,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 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.

Requirement 1. Prepare April and May 2017 income statements for Accelerate Motors under (a) variable costing and (b) absorption costing.

(a) Prepare April and May 2017 income statements for Accelerate Motors under variable costing. Complete the top half of the income statement for each month first, then complete the bottom portion.

		April 2017		May 2017
Revenues
Variable cost of goods sold:
	Beginning inventory
	Variable manufacturing costs
	Cost of goods available for sale
	Deduct ending inventory
	Variable cost of goods sold
Variable operating costs
Contribution margin

Fixed manufacturing costs
Fixed operating costs
Operating income

(b) Prepare April and May 2017 income statements for Accelerate Motors under absorption costing. Complete the top half of the income statement for each month first, then complete the bottom portion.

	April 2017			May 2017
Revenues
Cost of goods sold:
	Beginning inventory
	Variable manufacturing costs
	Allocated fixed manufacturing costs
	Cost of goods available for sale
	Deduct ending inventory
	Adjustment for production-volume variance
	Cost of goods sold
Gross margin

Variable operating costs
Fixed operating costs
Operating income