9-16 Variable and absorption costing; explaining operating income differences. [Excel template] (LO 3) TC Motors assembles and sells motor vehicles, and uses standard costing. Actual data relating to April and May are Unit data: Beginning inventory Production Sales Variable costs: April May 0 150 500 400 350 520 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 $26,000. 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 COGS in the month in which it occurs. Required 1. Prepare April and May 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. Check Figure: 1. a. Operating income, April, $1,950,000