Refer to Exercise E21A-52.
ReVitalAde produced 13,000 cases of powdered drink mix and sold 12,000 cases in April 2018. The sales price was $29, variable costs were $12 per case ($9 manufacturing and $3 selling and administrative), and total fixed costs were $100,000 ($91,000 manufacturing overhead and $9,000 selling and administrative). The company had no beginning Finished Goods Inventory.
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.