Data table January February 1,500 meals 1,800 meals .2,000 meals 1,400 meals $5 $5 $1 $1 $700 $500 Sales.. Production.... Variable manufacturing expense per meal.. Sales commission expense per meal. Total fixed manufacturing overhead............... $700 Total fixed marketing and administrative expenses.. $500 Print Done - X Requirements 1. Compute the product cost per meal produced under absorption costing and under variable costing. Do this first for January and then for February. 2. Prepare separate monthly income statements for January and for February, using the following: a. Absorption costing b. Variable costing. 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. Drint Done - X Marty's Entrees produces frozen meals, which it sells for $9 each. The company uses the FIFO inventory costing method, and it computes a new monthly fixed manufacturing overhead rate based on the actual number of meals produced that month. All costs and production levels are exactly as planned. The following data are from the company's first two months in business (Click the icon to view the data.) Read the requirements Requirement 1. Compute the product cost per meal produced under absorption costing and under variable costing Do this first for January and then for February January February Absorption costing costing Variable Absorption costing costing Variable Total product cost Marty's Entrees produces frozen meals, which it sells for $9 each. The company uses the FIFO inventory costing method, and it computes a new monthly fixed manufacturing overhead rate based on the actual number of meals produced that month. All costs and production levels are exactly as planned. The following data are from the company's first two months in business (Click the icon to view the data.) Read the requirement Requirement 2a. Prepare separate monthly income statements for January and for February, using absorption costing Marty's Entrees Income Statement (Absorption Costing) Less Less Month Ended January 31 February 28 Marty's Entrees produces frozen meals, which it sells for $9 each. The company uses the FIFO inventory costing method, and it computes a new monthly ixed manufacturing overhead rate based on the actual number of meals produced that month. All costs and production levels are exactly as planned. The following data are from the company's first two months in business (Click the icon to view the data.) Read the requirements Requirement 2b. Prepare Marty's Entrees' January and February income statements using variable costing. Marty's Entrees Contribution Margin Income Statement (Variable Costing) Less Less Month Ended January 31 February 28 Marty's Entrees produces frozen meals, which it sells for $9 each. The company uses the FIFO inventory costing method, and it computes a new monthly fixed manufacturing overhead rate based on the actual number of meals produced that month. All costs and production levels are exactly as planned. The following data are from the company's first two months in business: (Click the icon to view the data.) Read the requirements Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In January, absorption costing operating income Absorption costing defers some of variable costing income. This is because units produced were units sold until those units are sold. Deferring these costs in the units of ending inventory. These costs will not be costs to the future January's absorption costing income. In February, absorption costing operating income units sold for the month. As inventory variable costing operating income. This is because units produced were inventory are expensed in as was the case in this February, January's This costs that absorption costing assigned to that February's absorption costing income.