Nascar 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 $26,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 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.

1.	Prepare April and May 2017 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.

April May Unit data: 150 Beginning inventory Production 500 400 Sales 350 500 Variable costs: $ 9,500 $ 9,500 Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: 2,600 2,600 Manufacturing costs $ 2,250,000 $ 725,000 2,250,000 725,000 Operating (marketing) costs