Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2020 are as follows: The selling price per vehicle is $26,000. 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.

Requirements

1.	Prepare April and May 2020 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.

Data table

	A	B	C
1		April	May
2	Unit data:
3	Beginning inventory	0	150
4	Production	700	675
5	Sales	550	800
6	Variable costs:
7	Manufacturing cost per unit produced	$11,500	$11,500
8	Operating (marketing) cost per unit sold	3,200	3,200
9	Fixed costs:
10	Manufacturing costs	$2,100,000	$2,100,000
11	Operating (marketing) costs	550,000	550,000