Champion Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2017 are attached in a photo.

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.

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.

tandard costing. Ad nduction used to call April May fficiency, or spending variance Unit data: Beginning inventory Production 50 400 or Champion Motor 375 Sales 350 395 Motors under varia nplete the bottom portion (Co 8,500 $ 8,500 ril 2017 2,400 2,400 Variable costs: Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: Manufacturing costs Operating (marketing) costs $ 2,200,000 $ 675,000 2,200,000 675,000 Print Done