Refer to Exercise E21-18.
In E In May 2016, RefreshAde produced 20,000 cases of powdered drink mix and sold 23,000 cases, of which 3,000 were produced in April. The sales price was $30, variable costs were $13 per case ($10 manufacturing and $3 selling and administrative), and total fixed costs were $70,000 ($45,000 manufacturing and $25,000 selling and administrative).
Requirements
1. Prepare the May income statement using absorption costing.
2. Is operating income using absorption costing higher or lower than variable costing income? Explain why.
3. Determine the balance in Finished Goods Inventory as of May 31.