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 Operating Income Requirement 2. Is operating income using absorption costing higher or lower than variable costing income? Explain why. The operating income using the absorption cost method is the operating income under the variable cost method. The reason for this is because under absorption costing, the 2,000 cases in beginning Finished Goods Inventory included , that were not included in the inventory under the variable cost method. Requirement 3. Determine the balance in Finished Goods Inventory as of May 31. (Enter a "0" for any zero amounts.) The finished goods inventory as of May 31 is Reference Income Statement (Absorption Costing) Month Ended May 31 Net Sales Revenue Cost of Goods Sold: Gross Profit Selling and Administrative Costs: Variable Selling and Administrative Costs Operating Income In May, ReplenAde produced 12,000 cases of powdered drink mix and sold 13,000 cases, of which 1,000 were produced in April. The total April production was 10,000 . The sales price was $25, variable costs were $15 per case ( $10 manufacturing and $5 selling and administrative), and total fixed costs were $90,000($72,000 manufacturing and $18,000 selling and administrative). ReplenAde's May income statement using variable costing follows: (Click the icon to view the variable costing income statement.)