Refer to Exercises E21A-44 and E21A-45.
RefreshAde produced 15,000 cases of powdered drink mix and sold 12,000 cases in April 2016. 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 overhead and $25,000 selling and administrative). The company had no beginning Finished Goods Inventory.
Requirements
1. Which costing method produces the highest operating income? Explain why.
2. Which costing method produces the highest April 30 balance in Finished Goods Inventory? Explain why.