E21-17 (similar to)

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produced

8 comma 0008,000

cases of powdered drink mix and sold

6 comma 0006,000

cases in

AprilApril

20182018.

The sales price was

$ 20$20,

variable costs were

$ 8$8

per case

($ 6$6

manufacturing and

$ 2$2

selling and administrative), and total fixed costs were

$ 70 comma 000$70,000

($ 56 comma 000$56,000

manufacturing overhead and

$ 14 comma 000$14,000

selling and administrative). The company had no beginning Finished Goods Inventory. The company had the following results using variable costing

Reference

	Variable
	Costing
Total product cost per unit	$6.00
Cost of Finished Goods Inventory as of April 30, 2018	$12,000

Requirements

1.	Prepare the AprilApril income statement using absorption costing.
2.	Determine the product cost per unit and the total cost of the 2 comma 0002,000 cases in Finished Goods Inventory as of AprilApril 3030.
3.	Is the AprilApril 3030 balance in Finished Goods Inventory higher or lower than variable costing? Explain why

Requirement 1. Prepare the

AprilApril

income statement using absorption costing.

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Income Statement (Absorption Costing)
Month Ended April 30, 2018
Cost of Goods Sold:
Operating Income