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TV Plus Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows:

TV Plus Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows:

image text in transcribedThe selling price per unit is $2,600. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,300 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.

1.

Prepare income statements for TV Plus in January, February, and March 2017 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.

January February March Unit data: Beginning inventory 150 150 Production 1,250 1,300 1,150 1,360 1,370 Sales 1,250 Variable costs: 750 Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: $ $ 750 $ 475 $ 750 $ 475 $ 475 Manufacturing costs Operating (marketing) costs $ $ 533,000 $ 140,000 $ 533,000 $ 140,000 $ 533,000 140,000

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