Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data
relating to April and May 2020 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 (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 $24,000. The budgeted level of production used to
calculate the budgeted fixed manufacturing cost per unit is 500 units.
Prepare April and May 2020 income statements for Nascar Motors under (a) variable
costing and (b) absorption costing.