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In May, Replende produced 18,000 cases of powdered drink mix and sold 19,000 cases, of which 1,000 were produced in April. The total April production
In May, Replende produced 18,000 cases of powdered drink mix and sold 19,000 cases, of which 1,000 were produced in April. The total April production was 20,000. The sales price was $23, variable costs were $15 per case ($10 manufacturing and $5 selling and administrative), and total fixed costs were $90,000 ($72,000 manufacturing and $18,000 selling and administrative). ReplenAde's May income statement using variable costing follows: Income Statement (Variable Costing) Month Ended May 31 Net Sales Revenue $ 437,000 $ Variable Costs: Variable Manufacturing Overhead Variable Selling and Administrative Costs 190,000 95,000 285,000 152,000 Contribution Margin Fixed Costs: Fixed Manufacturing Overhead 72,000 18,000 Fixed Selling and Administrative Costs 90,000 $ 62,000 Operating Income 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. Requirement 1. Prepare the May income statement using absorption costing. ReplenAde Income Statement (Absorption Costing) Month Ended May 31 Net Sales Revenue $ 437,000 Cost of Goods Sold: Variable Cost of Goods Sold $ 190,000 95000 285000 Fixed Cost of Goods Sold Gross Profit 152000 Selling and Administrative Costs: Variable Selling and Administrative Costs 72000 Fixed Selling and Administrative Costs 18,000 90000 62000 Operating Income
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