EntertainMe Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows: The selling price per unit is $3,300. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,500 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. Read the requirements. (Click to view the data.) Data Table January February March Unit data: Beginning inventory 0 150 150 Production 1,500 1,400 1,520 Sales 1,350 1,400 1,530 Variable costs: $ 1,000 $ 1,000 Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: 1,000 $ 800 $ $ 800 $ 800 Print Done (b). Prepare income statements for EntertainMe in January, February, and March 2017 under absorption costing. Complete the top half of the income statement for each month first, then complete the bottom portion. (Enter a "0" 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. Abbreviation used; Adj. = Adjustment Mfg. = Manufacturing.) January 2017 February 2017 March 2017 Requirement 2. Explain the difference in operating income for January, February, and March under variable costing and absorption costing. Begin by preparing a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing. Determine the formula that will highlight the difference between the operating income under each method. Then complete the equation for each month. (Enter an amount in each input cell and enter a "0" for any zero balances. Abbreviations used: Beg. = beginning, End. = ending, Mfg. = Manufacturing, and Var. = Variable.) Absorption-costing Variable-costing operating income operating income = Jan Feb Mar The difference between absorption and variable costing is due solely to moving into inventories as inventories and out of inventories as they EntertainMe Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows: The selling price per unit is $3,300. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,500 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. Read the requirements. (Click to view the data.) Data Table January February March Unit data: Beginning inventory 0 150 150 Production 1,500 1,400 1,520 Sales 1,350 1,400 1,530 Variable costs: $ 1,000 $ 1,000 Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: 1,000 $ 800 $ $ 800 $ 800 Print Done (b). Prepare income statements for EntertainMe in January, February, and March 2017 under absorption costing. Complete the top half of the income statement for each month first, then complete the bottom portion. (Enter a "0" 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. Abbreviation used; Adj. = Adjustment Mfg. = Manufacturing.) January 2017 February 2017 March 2017 Requirement 2. Explain the difference in operating income for January, February, and March under variable costing and absorption costing. Begin by preparing a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing. Determine the formula that will highlight the difference between the operating income under each method. Then complete the equation for each month. (Enter an amount in each input cell and enter a "0" for any zero balances. Abbreviations used: Beg. = beginning, End. = ending, Mfg. = Manufacturing, and Var. = Variable.) Absorption-costing Variable-costing operating income operating income = Jan Feb Mar The difference between absorption and variable costing is due solely to moving into inventories as inventories and out of inventories as they
