Managerial Accounting: E21-19 In May 2016, RefreshAde produced 20,000 cases

Financial Managerial Accounting
E21-19 Preparing absorption costing income statements, production less than sales
In May 2016, RefreshAde produced 20,000 cases of powdered drink mix and sold 23,000 cases, of which 3,000 were produced in April. The sales price was $30, variable costs were $13 per case ($10 manufacturing and $3 selling and administrative), and total fixed costs were $70,000 ($45,000 manufacturing and $25,000 selling and administrative).

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 Finished Goods Inventory as of May 31.
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