April May 2 Unit data: 3 Beginning inventory 0 150 4 Production 500 475 5 Sales 350 600 6 Variable costs: 7 Manufacturing cost per unit produced $10,500 $10,500 8 Operating (marketing) cost per unit sold 3,600 3,600 9 Fixed costs: 10 Manufacturing costs $2,400,000 $2,400,000 11 Operating (marketing) costs 625,000 625,000 pop-up content ends The selling price per vehicle is . The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 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.

Requirements:

1. Prepare April and May 2020 income statements for FastTrack 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.