Question
Reference Net Sales Revenue Variable Costs: In May, ExerAde produced 12,000 cases of powdered drink mix and sold 13,000 cases, of which 1,000 were
Reference Net Sales Revenue Variable Costs: In May, ExerAde produced 12,000 cases of powdered drink mix and sold 13,000 cases, of which 1,000 were produced in April. The total April production was 10,000. The sales price was $22, variable costs were $14 per case ($10 manufacturing and $4 selling and administrative), and total fixed costs were $90,000 ($72,000 manufacturing and $18,000 selling and administrative). ExerAde'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. ExerAde Income Statement (Absorption Costing) Month Ended May 31 Operating Income ExerAde Income Statement (Variable Costing) Month Ended May 31 Variable Manufacturing Overhead Variable Selling and Administrative Costs Contribution Margin - Requirements $ 286,000 1. Prepare the May income statement using absorption costing. $ 130,000 52,000 182,000 104,000 Fixed Costs: Fixed Manufacturing Overhead 72,000 10.000 00.000 Print Done 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 -
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