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Suppose that during April, Sportade produces 10,000 cases of powdered drink mix and sells 11,000 cases. Sale price, variable cost (Click the icon to view
Suppose that during April, Sportade produces 10,000 cases of powdered drink mix and sells 11,000 cases. Sale price, variable cost (Click the icon to view relevant data.) per case, and total fixed expenses remain the same as in March. i (Click the icon to view the Income Statement (Absorption Costing) for March.) 1. Prepare the April income statement under absorption costing. 2. Is absorption costing income higher or lower than variable costing income? Explain. i (Click the icon to view the Income Statement (Variable Costing) for April.) 3. Reconcile the difference between the absorption costing income statement and the variable costing income statement. Requirement 1. Prepare the April income statement under absorption costing. Sportade Income Statement (Absorption Costing) Month Ended April 30 Sales revenue Deduct: Cost of goods sold: Beginning finished goods inventory Cost of goods manufactured Cost of goods available for sale Ending finished goods inventory Cost of goods sold Gross margin Deduct: Operating expenses Operating income Requirement 2. Is absorption costing income higher or lower than variable costing income? Explain. Absorption costing income is than variable costing income. The difference stems from two offsetting forces. expenses all fixed manufacturing overhead in the period incurred. But expenses fixed manufacturing overhead in the period when the related units are sold. Thus, shifts the timing when the fixed manufacturing overhead is expensed Requirement 3. Reconcile the difference between the absorption costing income statement and the variable costing income statement. Absorption costing net income Add: FMOH released from inventory Less: FMOH deferred to ending inventory Variable costing net income
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