Chapter 9 9-16 9-21 9-22 9-16 Variable and absorption costing, explaining operating-income differences. Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2014 are as follows: A B C D April May Unit data Beginning inventory 0 150 Production 500 400 Sales 350 520 Variable costs Manufacturing cost per unit produced $ 10,000 $ 10,000 Operating (marketing) cost per unit sold 3,000 3,000 Fixed costs Manufacturing costs $2,000,000 $2,000,000 Operating (marketing) costs 600,000 600,000 The selling price per vehicle is $24,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 500 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 2014 income statements for Nascar 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. 9-16 (30 min.) Variable and absorption costing, explaining operating-income differences. 1. Key inputs for income statement computations are April May Beginning inventory 0 150 Production 500 400 Goods available for sale 500 550 Units sold 350 520 Ending inventory 150 30 The budgeted fixed cost per unit and budgeted total manufacturing cost per unit under absorption costing are April May (a) Budgeted fixed manufacturing costs $ 2,000,000 $2,000,000 (b) Budgeted production 500 500 (c) = (a) : (b) Budgeted fixed manufacturing cost per unit $4,000 $4,000 (d) Budgeted variable manufacturing cost per unit $10,000 $ 10,000 (e) = (c) + (d) Budgeted total manufacturing cost per unit $14,000 $14,000