Managerial Accounting: E21-16 RefreshAde produced 15,000 cases (Absorption Costing)

Financial Managerial Accounting
E21-16 Preparing absorption costing income statements, production exceeds sales
RefreshAde produced 15,000 cases of powdered drink mix and sold 12,000 cases in April 2016. 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 overhead and $25,000 selling and administrative). The company had no beginning Finished Goods Inventory.

1. Prepare the April income statement using absorption costing.
2. Determine the product cost per unit and the total cost of the 3,000 cases in Finished Goods Inventory as of April 30.
3. Is the April 30 balance in Finished Goods Inventory higher or lower than variable costing? Explain why.
Powered by