In May, RefreshAde produced 20,000 cases of powdered drink mix and sold 23,000 cases, of which 3,000 were produced in April. The total April production was 15,000. The sales price was $27, variable costs were $7 per case ($5 manufacturing and $2 selling and administrative), and total fixed costs were $85,000 ($60,000 manufacturing and $25,000 selling and administrative). RefreshAde's May income statement using variable costing follows: (Click the icon to view the variable costing income statement.) Read the requirements. Requirement 1. Prepare the May income statement using absorption costing. RefreshAde Income Statement (Absorption Costing) Month Ended May 31 RefreshAde Income Statement (Variable Costing) Month Ended May 31 Net Sales Revenue $ 621,000 Variable Costs: Variable Manufacturing Overhead 115,000 Variable Selling and Administrative Costs 46,000 161,000 Contribution Margin 460,000 Fixed Costs: Fixed Manufacturing Overhead 60,000 Fixed Selling and Administrative Costs 25,000 85,000 375,000 Operating Income Print Done ent 1 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. Print Done X Contribution Margin Hor Cost of Goods Sold: Fixed Costs: Fixed Cost of Goods Sold Fixed Selling and Administrative Costs Gross Profit Net Sales Revenue EM6-20 (similar to) art 1 of 3 > k mix and sold 23,000 cases, of wh ring and $2 selling and administrat g variable costing follows: ent.) sorption costing. Selling and Administrative Costs: ing) Variable Costs

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