April 2017 May 2017 Revenues S 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 Cool Ride Motors under absorption costing. Complete the top half of the income statement for each month first. then complete the bottom portion. (Enter a "0" for any zero balance accounts. Label any variances as favorable (F) or unfavorable (U). If an account does not have a variance, do not select a label.) 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 Requirement 2. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing Begin by determining the formula that will highlight the difference between the operating income under each method. Then complete the equation for each month. (Abbreviations used: Beg. = Beginning, End. = Ending, Var. = Variable, Mig = Manufacturing. Complete all answer boxes. Enter a "0" for any zero balance accounts.) Absorption-costing Variable-costing operating income operating income Fixed mig costs in end. inventory Fixed mfg costs in beg. inventory Apr May The difference between absorption and variable costing is due solely to moving fixed manufacturing costs into inventories as inventories increase and out of inventories as they decreaseA B C April May 2 Unit data: 3 Beginning inventory 0 50 4 Production 500 450 5 Sales 450 470 6 Variable costs: 7 Manufacturing cost per unit produced 8,000 $ 8,000 8 Operating (marketing) cost per unit sold 3,600 3,600 9 Fixed costs: 10 Manufacturing costs 2,200,000 2,200,000 11 Operating (marketing) costs 650,000 650,000