Speedy Motors assembles and sells motor vehicles and uses The variable manufacturing costs per unit of Speedy Motors standard costing. Actual data and variable costing and are as follows: absorption costing income statements relating to April and E (Click the icon to view the variable manufacturing costs May 2017 are as follows: per unit.) E: (Click the icon to view the data.) Read the requirements. (Click the icon to view the variable costing income statements.) (Click the icon to view the absorption costing income statements.) April May Unit data: Beginning inventory 150 Production 500 475 Sales 350 595 Variable costs: Manufacturing cost per unit produced $ 11,000 $ 11,000 Operating (marketing) cost per unit sold 3,800 3,800 Fixed costs: Manufacturing costs $ 2,400,000 $ 2,400,000 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 $ 9,100,000 May 2017 $ 15,470,000 Revenues Variable costs: $ $ Beginning inventory Variable manufacturing costs Cost of goods available for sale 0 5,500,000 1,650,000 5,225,000 5,500,000 (1,650,000) 6,875,000 (330,000) Less: Ending inventory Variable cost of goods sold 3,850,000 1,330,000 6,545,000 2,261,000 Variable operating costs 5,180,000 8,806,000 Total variable costs Contribution margin 3,920,000 6,664,000 Fixed costs: Fixed manufacturing costs 2,400,000 750,000 2,400,000 750,000 Fixed operating costs Total fixed costs 3,150,000 3,150,000 $ 770,000 $ 3,514,000 Operating income April 2017 $ 9,100,000 May 2017 $ 15,470,000 Revenues Cost of goods sold: Beginning inventory Variable manufacturing costs 0 $ 5,500,000 2,400,000 2,370,000 5,225,000 2,280,000 Allocated fixed manufacturing costs Cost of goods available for sale Less: Ending inventory 7,900,000 (2,370,000) 9,875,000 (474,000) 120,000 Adjustment for production-volume variance 5,530,000 9,521,000 Cost of goods sold Gross margin Operating costs: 3,570,000 5,949,000 Variable operating costs 1,330,000 750,000 2,261,000 750,000 Fixed operating costs 2,080,000 3,011,000 Total operating costs $ 1,490,000 $ 2,938,000 Operating income April May 7,000 Direct material cost per unit Direct manufacturing labor cost per unit Manufacturing overhead cost per unit 7,000 $ 1,300 2,700 1,300 2,700 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
