Course: Cost Accounting T Spring 2019 Speedy Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2017 are as follows: (Click the icon to view the data.) The selling price per vehicle is $27,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 700 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 requirements2 Requirement 1. Prepare April and May 2017 income statements for Speedy Motors under (a) variable costing and (b) absorption costing. (a) Prepare April and May 2017 income statements for Speedy Motors under variable costing. Complete the top half of the income statement for each month first, then complete the bottom portion. (Complete all answer boxes. Enter a "0 for any zero balance accounts.) April 2017 May 2017 14,850,000 $21,600,000 Variable cost of goods sold: Beginning inventory Variable manufacturing costs Cost of goods available for sale Deduct ending inventory 8,400,000 8,400,000 ,800,000 $ 1,800,000 8,100,000 9,900,000 9,600,000 2,240,000 9,760,000 2,100,000 750,000 S 6,910,000 Variable cost of goods sold 6,600,000 1,540,00 Variable operating costs Contribution margin Fixed manufacturing costs 6,710,000 2,100,000 750,000 $ 3,860,000 Fixed operating costs Operating income (b) Prepare April and May 2017 income statements for Speedy Motors under absorption costing. Complete the top half of the income statement for each month first, then complete the bottom portion. (Enter a "ot for any zero balance accounts. Label any variances as favorable (F) or unfavorable (U), If an account does not have a variance, do not select a label.) April 2017 May 2017 (1) Revenues (4) Variable manufacturing costs (5) Allocated fixed manufacturing costs (6) Cost of goods available for sale (7Deduct ending inventory (8) Adjustment for production-volume varianoe (11) Cost of goods sold (12) Gross margin (13) (14) (15) Requirement 2. Prepare a numerical reconciliation and explanation of the diflerence between operating income for each month under variable costing and absorption costing. Begin by determining the formula that will highlight the difference betwen the operating income under each method. Then complete the equation for each monn. (Abbreviations used: Beg. = Beginning, End. = Ending. Var.Vanable, Mig . Manufacturing. Complete all answer boxes. Enter a "O for any zero balance accounts.) operating income-operating income (16) (17) Apr May The difference between absorption and variable costing is due solely to moving (18)into inventorios as inventories (19)and out of inventories as they (20) 1: Data Table April Unit data: Beginning inventory 150 675 800 700 550 Variable costs: Manufacturing cost per unit produced Operating (marketing) cost per unit sold 12,000 $ 12,000 2,800 2,800 Fixed costs: Manufacturing costs Operating (marketing) costs s 2,100,000 2100,000 750,000 750,000 Prepare April and May 2017 income statements for Speedy Motors under (a) variable costing and (b) absorption costing 1. 2. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing. O Contribution margin O cost of goods available for sale Cost of goods sold O Deduct ending inventory 0 Adjustment for production-volume variance O Allocated fixed manufacturing costs Beginning inventory O Fixed manufacturing costs Revenues O Fixed operating costs Variable manufacturing costs O Gross margin O Variable operating costs Operating income (2) O O Variable costs: O Cost of goods sold O Fixed costs: O Operating costs: O Contribution margin O Cost of goods available for sale O Cost of goods sold O Deduct ending inventory (3) O 0 Adjustment for production-volume variance O Allocated fixed manufacturing costs O Beginning inventory O Fixed manufacturing costs Revenues O Fixed operating costs Variable manufacturing costs O Gross margin O Operating income O Variable operating costs (4) O O Contribution margin O Adjustment for production-volume variance Cost of goods available for sale 0 Allocated fixed manufacturing costs O Beginning inventory O Cost of goods sold O Deduct ending inventory O Fixed manufacturing costs O Fixed operating costs O Gross margin Revenues OVariable manufacturing costs O Variable operating costs Operating income O Contribution margin (5) O Cost of goods available for sale Cost of goods sold O Deduct ending inventory 0 Adjustment for production-volume variance O Allocated fixed manufacturing costs O Beginning inventory O Fixed manufacturing costs O Revenues O Fixed operating costs O Viniable manufacturing costs O Gross margin O Operating income O Variable operating costs (6) O 0 Contribution margin O Cost of goods available for sale Cost of goods sold O Deduct ending inventory Adjustment for production volume variance Alocaled fixed manufacturing costs O Beginning inventory O Fixed manufacturing costs O Fixed operating costs O Gross margin O Operating income O Revenues O vrable manufacturing costs Variable operating costs O Contribution margin O Cost of goods available for sale O Cost of goods sold O Deduct ending inventory O Afustrment for production-volume variance O Allocated fixed manufacturing costs O Beginning inventory O Fixed manufacturing costs Fixed operating costs O Gross margin O Operating income O Revenues Ovrable manufacturing costs O Variable operating costs (8) O Contribution margin O Cost of goods available for sale Cost of goods sold O Deduct ending inventory Ajustment for production-ourne variance Allocated fixed manufacturing costs Beginning inventory O Flixed manufacturing costs Revenues Fixed operating costs Variable manufacturing costs O Gross margin OOperating income O Variable operating costs (9) (10) O F (11) O O Contribution margin O Adjustment for production-volume variance Cost of goods available for sale Alocaled fixed manufacturing costs O Cost of goods sold Deduct ending inventory O Beginning inventory O Fixed manufacturing costs O Fixed operating costs O Gross margin O Operating income Revenues O Variable manufacturing costs O Variable operaing costs O Contribution margin O Cost of goods avalable for sale Cost of goods sold O Deduct ending inventory (12) O 0 Adjustment for production-volume variance O Allocated fixed manufacturing costs Beginning inventory O Fixed manufacturing costs O Revenues Fixed operating costs Variable manufacturing costs O Gross margin O Operating income O Variable operating costs (13) O OContribution margin 0 Adjustment for production-volume variance O Cost of goods available for sale O Deduct ending inventory O Fixed manufacturing costs OBeginning inventory O Fixed operating costs Variable cost of goods sold O Gross margin O Operating income O Variable operating costs 0 Revenues O Variable manufacturing costs (14) O Contribution margin O Cost of goods available for sale O Deduct ending inventory O Fixed manufacturing costs 0 Adjustment for production-volume variance 0 Allocated fixed manufacturing costs O Beginning inventory O Fixed operating costs O variable cost of goods sold O Gross margin O Operating income O Variable operating costs 0 Revenues O Variable manufacturing costs (15) O Contribution margin 0 Adjustment for production-volume variance O Cost of goods available for sale O Deduct ending inventory O Fixed manufacturing costs O Allocated fixed manufacturing costs O Beginning inventory O Fixed operating costs Variable cost of goods sold O Gross margin O Operating income Variable operating costs O Revenues O Variable manufacturing costs (16) O Fixed mfg costs in beg, inventory O Fixed mfg costs in end. inventory O Fixed operating costs O Var. mfg costs in beg. inventory Var. mfg costs in end. inventory Var. operating costs Var. mig costs in beg inventory O Fixed mig costs in beg, inventory Var. mfg costs in end. inventory O Fixed mig costs in end. inventory Var operating costs O Fixed operating costs fixed manufacturing costs O fixed operating costs O variable manufacturing costs O variable operating costs (19) O decrease increase (18) (20) O decrease increase