Limonade produced 14,000 cases of powdered drink mix and sold 13,000 cases in April. The sales price was $22, variable costs were $15 per case ( $10 manufacturing and $5 selling and administrative), and total fixed costs were $80,000 ( $56,000 manufacturing overhead and $24,000 selling and administrative). The company had no beginning Finished Goods Inventory. Limonade calculated the cost per unit and the fotal cost of the 1,000 cases in Finished Goods Inventory as of April 30 using both the absorption and variable costing methods. The calculations are presented below. (Click the icon to view the calculations using the absortion and variable costing methods,) Read the requirements. Requirement 1. Which costing method produces the highest operating income? Explain why. The cost method produces the highest operating income The primary reason for this is that the unit cost Under the absorption are distributed across the entire production run as part of costing method. of fixed manufacturing costs are Under the variable costing method, this amount is Reference 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