Race Track Motors assembles and sells motor vehicles and uses standard costing. Actual data and variable costing and absorption costing income statements relating to April and May 2014 are as follows:

The variable manufacturing costs per unit of Race Track Motors are as follows:

1. Prepare income statements for Race Track Motors in April and May 2014 under throughout costing.

2. Contrast the results in requirement 1 with the absorption and variable costing income statements presented.

3. Give one motivation for Race Track Motors to adopt throughout costing.

variable costing income statements April 2014 May 2014 Revenues $8,050,000 $ 7,590,000 Variable costs Beginning inventory Variable manufacturing costs Cost of goods available for sale Less: Ending inventory Variable cost of goods sold Variable operating costs 0 3,800,000 3,800,000 (475,000) 3,325,000 1,330,000 $475,000 2,850,000 3,325,000 (190,000) 3,135,000 1,254,000 4,655,000 4,389,000 Total variable costs Contribution margin 3,395,000 3,201,000 Fixed costs 2,200,000 600,000 2,200,000 600,000 Fixed manufacturing costs Fixed operating costs 2,800,000 2,800,000 Total fixed costs $595,000 $ 401,000 Operating income Print Done