9-21 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:

April May

Unit Data:

Beginning Inventory 0 150

Production 500 400

sales 350 520

Variable Costs

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

Operating cost per unit sold 3000 3000

Fixed Costs

Manufacturing Costs $2,000,000 $2,000,000

Operating Costs 600,000 600,000

9.5-31 Full Alternative Text

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.

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.