1.		Compute the product cost per meal produced under absorption costing and under variable costing.
2.		Prepare income statements for January 2018 using:
		a. absorption costing.
		b. variable costing.
3.		Is operating income higher under absorption costing or variable costing in January?

Stella's Foods produces frozen meals that it sells for $7 each. The company computes a new monthly fixed manufacturing overhead allocation rate based on the planned number of meals to be produced that month. Assume all costs and production levels are exactly as planned. The following data are from Stella's Foods's first month in business.

January 2018

Units produced and sold

Sales 850 meals

Production 1050 meals

Variable manufacturing cost per meal $ 3

Sales commission cost per meal 1

Total fixed manufacturing overhead 315

Total fixed selling and administrative cost 400