TC Motors assembles and sells motor vehicles, and uses standard costing. Actual data relating to April and

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TC Motors assembles and sells motor vehicles, and uses standard costing. Actual data relating to April and May 2015 are

AprilMay

Unit data:

Beginning inventory.........................................0..............150

Production.................................................500..............400

Sales.........................................................350.............520

Variable costs:

Manufacturing cost per unit produced............$ 10,000......$ 10,000

Operating (marketing) cost per unit sold...........$ 3,000.......$ 3,000

Fixed costs:

Manufacturing costs..............................$2,000,000..$2,000,000

Operating (marketing) costs.......................$ 600,000...$ 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 rate variances. Any production- volume variance is written off to cost of goods sold in the month in which it occurs.

Required

1. Prepare April and May 2015 statements of comprehensive income for TC Motors under (a) variable costing and (b) absorption costing.

2. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing.

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Related Book For  book-img-for-question

Cost Accounting A Managerial Emphasis

ISBN: 978-0133138443

7th Canadian Edition

Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham

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