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Question 1. Prepare April and May 2017 income statements for Accelerate Motors under (a) variable costing and (b) absorption costing.
Question 2. Prepare a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing.
April
May
Unit data:
Beginning inventory
0
100
Production
600
550
Sales
500
Variable costs:
Manufacturing cost per unit produced
$ 8,000
Operating (marketing) cost per unit sold
3,800
Fixed costs:
Manufacturing costs
$ 2,400,000
Operating (marketing) costs
500,000
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