April	May
Unit data
Beginning inventory	0	150
Production	600	500
Sales	450	600
Variable costs
Manufacturing cost per unit produced	$10,000	$10,000
Operating (marketing) cost per unit sold	4,000	4,000
Fixed costs
Manufacturing costs	$2,400,000	$2,400,000
Operating (marketing) costs	500,000	500,000

The selling price per vehicle is

$29,000.

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.

Requirements

1.	Prepare April and May 2014 income statements for FastRideFastRide 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.

Requirement 1. Prepare April and May

2014

income statements for

FastRideFastRide

Motors under (a) variable costing and (b) absorption costing.(a) Prepare April and May

2014

income statements for

FastRideFastRide

Motors under variable 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.)

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April