The selling price per unit is $2,500. The budgeted level of production used to calculate the budgeted

fixed manufacturing cost per unit is 1,000 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.

Required 1. Prepare income statements for Nascar Motors in April and May of 2011 under throughput costing.

2. Contrast the results in requirement 1 with those in requirement 1 of Exercise 9-16.

3. Give one motivation for Nascar Motors to adopt throughput costing.

9-18 Variable and absorption costing, explaining operating-income differences. BigScreen Corporation

manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January,

February, and March of 2012 are as follows:

January February March

Unit data

Beginning inventory 0 300 300

Production 1,000 800 1,250

Sales 700 800 1,500

Variable costs

Manufacturing cost per unit produced $ 900 $ 900 $ 900

Operating (marketing) cost per unit sold $ 600 $ 600 $ 600

Fixed costs

Manufacturing costs $400,000 $400,000 $400,000

Operating (marketing) costs $140,000 $140,000 $140,000

Required 1. Prepare income statements for BigScreen in January, February, and March of 2012 under (a) variable

costing and (b) absorption costing.

2. Explain the difference in operating income for January, February, and March under variable costing

and absorption costing.