Chapter 6: Variable Costing & Segment Accounting Problem 1 Caribbean SuperSound Caribbean SuperSound manufactures and sells sound equipment for outdoor spaces, particularly well-suited for hotel swimming pool areas. Actual data relating to April, May, and June 2020 are as follows: April May June 0 2,000 1,400 600 1,600 1,600 600 2,500 3,000 Unit data Beginning Inventory Production Sales Variable Costs Manufacturing cost per unit produced Marketing cost per unit sold Fixed Costs Manufacturing costs Marketing costs $1,800 $1,200 $1,800 $1,200 $1,800 $1,200 $1,200,000 $420,000 $1,200,000 $420,000 $1,200,000 $420,000 The selling price per equipment is $5,150. Caribbean SuperSound uses normal costing and allocates manufacturing overhead using units of production as allocation base. The budgeted level of production is 1,000 units. Any over/under allocation of overhead is written-off to COGS in the month in which it occurs. 1. Prepare income statements for Caribbean SuperSound in April, May, and June 2020 under: a. Variable costing b. Absorption costing 2. Explain the difference in operating income for April, May, and June under variable costing and absorption costing