Variable and absorption costing, explaining operating-income differences. Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2017 are as follows: Home Insert Page Layout 3 A Show Transcribed Text 1 2 Unit data: 3 Beginning inventory 4 Production 5 Sales 6 Variable costs: 7 Manufacturing cost per unit produced Operating (marketing) cost per unit sold 8 9 Fixed costs: 10 Manufacturing costs 11 Operating (marketing) costs Formulas B April Data 0 500 350 $ 10,000 3,000 $2,000,000 600,000 C Review D May 150 400 520 $ 10,000 3,000 $2,000,000 600,000 The selling price per vehicle is $24,000. 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. Required: Prepare April and May 2017 income statements for Nascar Motors under (a) variable costing and (b) absorption costing. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing.
Variable and absorption costing, explaining operating-income differences. Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2017 are as follows: Home Insert Page Layout 3 A Show Transcribed Text 1 2 Unit data: 3 Beginning inventory 4 Production 5 Sales 6 Variable costs: 7 Manufacturing cost per unit produced Operating (marketing) cost per unit sold 8 9 Fixed costs: 10 Manufacturing costs 11 Operating (marketing) costs Formulas B April Data 0 500 350 $ 10,000 3,000 $2,000,000 600,000 C Review D May 150 400 520 $ 10,000 3,000 $2,000,000 600,000 The selling price per vehicle is $24,000. 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. Required: Prepare April and May 2017 income statements for Nascar Motors under (a) variable costing and (b) absorption costing. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Dd2.
Transcribed Image Text:Variable and absorption costing, explaining operating-income differences. Nascar Motors assembles and sells motor
vehicles and uses standard costing. Actual data relating to April and May 2017 are as follows:
Home
Insert Page Layout
A
1
2 Unit data:
3 Beginning inventory
4 Production
5
Sales
6 Variable costs:
7 Manufacturing cost per unit produced
8 Operating (marketing) cost per unit sold
9 Fixed costs:
10
Manufacturing costs
11 Operating (marketing) costs
Show Transcribed Text
Formulas
B
April
Data
0
500
350
$ 10,000
3,000
$2,000,000
600,000
с
Review
D
May
150
400
520
$10,000
3,000
$2,000,000
600,000
The selling price per vehicle is $24,000. 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.
Required:
Prepare April and May 2017 income statements for Nascar Motors under (a) variable costing and (b) absorption costing.
Prepare a numerical reconciliation and explanation of the difference between operating income for each month under
variable costing and absorption costing.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education