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Champion Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2017 are as follows: B (Click the
Champion Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2017 are as follows: B (Click the icon to view the data.) The selling price per vehicle is $25,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 400 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. Read the requirements. 1. Prepare April and May 2017 income statements for Champion 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. April 2017 625000000 May 2017 10750000 Revenues Variable cost of goods sold: Beginning inventory 0 1425000 3800000 2850000 Variable manufacturing costs Cost of goods available for sale 3800000 4275000 1425000 190000 Deduct ending inventory Adjustment for production-volume variance 2375000 4085000 Cost of goods available for sale Gross margin April May Unit data: 0 150 Beginning inventory Production 400 300 Sales 250 430 Variable costs: $ 9,500 $ 9,500 2,000 2,000 Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: Manufacturing costs Operating (marketing) costs $ 2,000,000 $ 2,000,000 750,000 750,000
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