The selling price per vehicle is $28,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 500 units.There are no price, efeciency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs.

Prepare April and May 2017 income statements for Speedy Motors under absorption costing. Complete the top half of the income statement for each month first, then complete the bottom portion.

DATA APRIL MAY

Beginning Inventory 0 100

Production 500 400

Sales 400 460

Variable costs:

Manufacturing cost $8500 $8500

per unit produced

Operating cost/unit sold 3400 3400

Fixed Costs:

Manufacturing Costs $2000000 2000000

Operating Costs 725,000 725,000

(marketing)