The selling price per unit is $3,500. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,100 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.

Requirement: 

1. Prepare income statements for Mark inJanuary, February, and March 2020 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.

Mark manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2020 are as follows:

Data table Unit data: Beginning inventory Production Sales Variable costs: Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: Manufacturing costs Operating (marketing) costs $ $ $ January 0 1,100 950 600 $ 575 $ February 440,000 $ 120,000 $ 150 1,075 1,075 600 $ 575 $ 440,000 $ 120,000 $ March I 150 1,120 1,205 600 575 440,000 120,000