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.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 28P: The following information pertains to Vladamir, Inc., for last year: There are no work-in-process...
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