Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2017 are as follows:

The selling price per vehicle is $ 29,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 500units. 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 2017 income statements for Cool Ride 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.

April May Unit data: Beginning inventory 50 Production 500 475 Sales 450 505 Variable costs: $ 9,500 $ 3,400 9,500 3,400 Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: Manufacturing costs Operating (marketing) costs $ 2,000,000 $ 725,000 2,000,000 725,000