Financial Managerial Accounting: E21-19 In May 2014, VitaSport produced 20,000 cases (Absorption)

Financial Managerial Accounting
E21-19 Preparing absorption costing income statements, production less than sales
Refer to your answers in E21-15.
In May 2014, VitaSport produced 20,000 cases of powdered drink mix and sold 23,000 cases, of which 3,000 were produced in April. The sale price was $22, variable costs were $14 per case ($10 manufacturing and $4 selling and administrative), and total fixed costs were $55,000 ($40,000 manufacturing and $15,000 selling and administrative).

1. Prepare the May income statement using absorption costing.
2. Is the operating income using absorption costing higher or lower than variable costing income? Explain.
3. Determine the balance in Finished Goods Inventory as of May 31.
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