Share
Explore BrainMass

Variable and absorption costing for a vehicle

9-16 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
2006 are:

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.
If you want to use Excel to solve this exercise, go to the Excel Lab at www.prenhall.com/horngren/cost12e
and download the template for Exercise 9-16.
1. Prepare April and May 2006 income statements for Nascar 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.

9-17 Throughput costing (continuation of 9-16). The variable manufacturing costs per unit of Nascar
Motors are:

If you want to use Excel to solve this exercise, go to the Excel Lab at www.prenhall.com/horngren/cost12e
and download the template for Exercise 9-16.
1. Prepare income statements for Nascar Motors in April and May of 2006 under throughput costing.
2. Contrast the results in requirement 1 with those in requirement 1 of Exercise 9-16.
3. Give one motivation for Nascar Motors to adopt throughput costing.

Attachments

Solution Summary

Variable and absorption costing for a selling price of a vehicle is discussed. The budget level of production is determined.

$2.19