Question 3.

In May, VitaSport produced 11,000 cases of powdered drink mix and sold 14,000 cases, of which 3,000 were produced in April. The total April production was 12,000. The sales price was $22, variable costs were $13 per case ($10 manufacturing and $3 selling and administrative), and total fixed costs were $75,000 ($55,000 manufacturing and $20,000 selling and administrative). VitaSport'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. VitaSport Income Statement (Absorption Costing) Month Ended May 31 Operating Income Requirements 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 balance in Finished Goods Inventory as of May 31 . Reference VitaSport Income Statement (Variable Costing) Month Ended May 31 Net Sales Revenue Variable Costs: Variable Manufacturing Overhead Variable Selling and Administrative Costs Contribution Margin Fixed Costs: Fixed Manufacturing Overhead Fixed Selling and Administrative Costs Operating Income Print 140,000 42,000 55,000 20,000 308,000 182,000 126,000 75,000 51 ,ooo Done Print Done