FastRide Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2020 are as follows: : (Click the icon to view the data.) The selling price per vehicle is $29,000. 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. Read the requirements. A B 1 April May 3 0 50 4 400 300 350 310 2 Unit data: Beginning inventory Production 5 Sales 6 Variable costs: 7 Manufacturing cost per unit produced 8 Operating (marketing) cost per unit sold 9 Fixed costs: 10 Manufacturing costs 11 Operating (marketing) costs $ 8,000 $ 8,000 3,800 3,800 $ 2,000,000 $ 2,000,000 550,000 550,000 Requirement 1. Prepare April and May 2020 income statements for Speedy Motors under (a) variable costing and (b) absorption costing. (a) Prepare April and May 2020 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 input fields. Enter a "0" for any zero balance accounts.) April 2020 May 2020 Revenues $ 10,150,000 $ 11,600,000 Variable cost of goods sold: Beginning inventory $ 575,000 Variable manufacturing costs 4,600,000 4,312,500 Cost of goods available for sale 4,600,000 4,887,500 Deduct ending inventory (575,000) (287,500) Variable cost of goods sold 4,025,000 4,600,000 Variable operating costs 1,190,000 1,360,000 Contribution margin 4,935,000 5,640,000 Fixed manufacturing costs 2,000,000 2,000,000 Fixed operating costs 500,000 500,000 Operating income $ 2,435,000 $ 3,140,000 (b) Prepare April and May 2020 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 "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.) April 2020 May 2020 Revenues $ 10,150,000 $ 11,600,000 Cost of goods sold: Beginning inventory $ 825,000 Variable manufacturing costs 4,600,000 4,312,500 Allocated fixed manufacturing costs 2,000,000 1,875,000 Cost of goods available for sale 6,600,000 7,012,500 Deduct ending inventory (825,000) (412,500) Adjustment for production-volume variance 0 125,000 Cost of goods sold 5,775,000 6,725,000 Gross margin 4,375,000 4,875,000 Variable operating costs 1,190,000 1,360,000 Fixed operating costs 500,000 500,000 Operating income $ 2,685,000 $ 3,015,000 Requirement 2. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing. Begin by determining the formula that will highlight the difference between the operating income under each method. Then complete the equation for each month. (Abbreviations used: Beg. = Beginning, End. = Ending, Var. = Variable, Mfg = Manufacturing. Complete all answer boxes. Enter a "0" for any zero balance accounts.) Absorption-costing Variable-costing operating income - Operating income = Fixed mfg costs in end. inventory'. Fixed mfg costs in beg. inventory Apr $ 2,685,000 $ 2,435,000 $ 250,000 0 3,015,000 $ 3,140,000 $ 125,000 250,000 May $ into inventories as inventories increase and out The difference between absorption and variable costing is due solely to moving fixed manufacturing costs of inventories as they decrease Requirements 1. Prepare April and May 2020 income statements for FastRide 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. FastRide Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2020 are as follows: : (Click the icon to view the data.) The selling price per vehicle is $29,000. 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. Read the requirements. A B 1 April May 3 0 50 4 400 300 350 310 2 Unit data: Beginning inventory Production 5 Sales 6 Variable costs: 7 Manufacturing cost per unit produced 8 Operating (marketing) cost per unit sold 9 Fixed costs: 10 Manufacturing costs 11 Operating (marketing) costs $ 8,000 $ 8,000 3,800 3,800 $ 2,000,000 $ 2,000,000 550,000 550,000 Requirement 1. Prepare April and May 2020 income statements for Speedy Motors under (a) variable costing and (b) absorption costing. (a) Prepare April and May 2020 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 input fields. Enter a "0" for any zero balance accounts.) April 2020 May 2020 Revenues $ 10,150,000 $ 11,600,000 Variable cost of goods sold: Beginning inventory $ 575,000 Variable manufacturing costs 4,600,000 4,312,500 Cost of goods available for sale 4,600,000 4,887,500 Deduct ending inventory (575,000) (287,500) Variable cost of goods sold 4,025,000 4,600,000 Variable operating costs 1,190,000 1,360,000 Contribution margin 4,935,000 5,640,000 Fixed manufacturing costs 2,000,000 2,000,000 Fixed operating costs 500,000 500,000 Operating income $ 2,435,000 $ 3,140,000 (b) Prepare April and May 2020 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 "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.) April 2020 May 2020 Revenues $ 10,150,000 $ 11,600,000 Cost of goods sold: Beginning inventory $ 825,000 Variable manufacturing costs 4,600,000 4,312,500 Allocated fixed manufacturing costs 2,000,000 1,875,000 Cost of goods available for sale 6,600,000 7,012,500 Deduct ending inventory (825,000) (412,500) Adjustment for production-volume variance 0 125,000 Cost of goods sold 5,775,000 6,725,000 Gross margin 4,375,000 4,875,000 Variable operating costs 1,190,000 1,360,000 Fixed operating costs 500,000 500,000 Operating income $ 2,685,000 $ 3,015,000 Requirement 2. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing. Begin by determining the formula that will highlight the difference between the operating income under each method. Then complete the equation for each month. (Abbreviations used: Beg. = Beginning, End. = Ending, Var. = Variable, Mfg = Manufacturing. Complete all answer boxes. Enter a "0" for any zero balance accounts.) Absorption-costing Variable-costing operating income - Operating income = Fixed mfg costs in end. inventory'. Fixed mfg costs in beg. inventory Apr $ 2,685,000 $ 2,435,000 $ 250,000 0 3,015,000 $ 3,140,000 $ 125,000 250,000 May $ into inventories as inventories increase and out The difference between absorption and variable costing is due solely to moving fixed manufacturing costs of inventories as they decrease Requirements 1. Prepare April and May 2020 income statements for FastRide 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