Speedy 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 2017 are as follows: The variable manufacturing costs per unit of Speedy Motors are as follows: E. (Click the icon to view the variable manufacturing costs per unit.) 450 April May Unit data: Beginning inventory 50 Production Sales 475 Variable costs: Manufacturing cost per unit produced $ 9,500 $ 9,500 Operating (marketing) cost per unit sold 3,400 3,400 Fixed costs: Manufacturing costs $ 2,250,000 $ 2,250,000 Operating (marketing) costs 750,000 750,000 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. April 2017 $ 11,700,000 May 2017 $ 12,350,000 $ $ 0 4,750,000 475,000 4,275,000 4,750,000 (475,000) 4,750,000 (237,500) Revenues Variable costs: Beginning inventory Variable manufacturing costs Cost of goods available for sale Less: Ending inventory Variable cost of goods sold Variable operating costs Total variable costs Contribution margin Fixed costs: Fixed manufacturing costs Fixed operating costs Total fixed costs 4,275,000 1,530,000 4,512,500 1,615,000 5,805,000 6,127,500 5,895,000 6,222,500 2,250,000 750,000 2,250,000 750,000 3,000,000 3,000,000 3,222,500 $ 2,895,000 $ Operating income April 2017 $ 11,700,000 May 2017 $ 12,350,000 $ 4,750,000 2,250,000 700,000 4,275,000 2,025,000 7,000,000 (700,000) Revenues Cost of goods sold: Beginning inventory Variable manufacturing costs Allocated fixed manufacturing costs Cost of goods available for sale Less: Ending inventory Adjustment for production-volume variance Cost of goods sold Gross margin Operating costs: Variable operating costs Fixed operating costs Total operating costs 7,000,000 (350,000) 225,000 6,300,000 6,875,000 5,400,000 5,475,000 1,530,000 750,000 1,615,000 750,000 2,280,000 2,365,000 $ 3,120,000 $ 3,110,000 Operating income April $ Direct material cost per unit Direct manufacturing labor cost per unit Manufacturing overhead cost per unit 6,800 $ 1,800 900 May 6,800 1,800 900 1. Prepare income statements for Speedy Motors in April and May 2017 under throughput costing 2. Contrast the results in requirement 1 with the absorption and variable costing income statements presented. 3. Give one motivation for Speedy Motors to adopt throughput costing
