Prepare April and May 2014income statements for Race Track Motors under 1. Variable and 2. absorption costing. The selling price per vehicle is $ 25,000. 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.

April May

Unit data
Beginning inventory	0	100
Production	400	300
Sales	300	380
Variable costs
Manufacturing cost per unit produced	$9,000	$9,000
Operating (marketing) cost per unit sold	3,800	3,800
Fixed costs
Manufacturing costs	$2,200,000	$2,200,000
Operating (marketing) costs	650,000	650,000

Revenues
Cost of goods sold:
	Beginning inventory	$0
	Variable manufacturing costs
	Allocated fixed manufacturing costs
	Cost of goods available for sale
	Deduct ending inventory
	Adjustment for production-volume variance	0
	Cost of goods sold
Gross margin
Variable operating costs
Fixed operating costs

And 3. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing.