Louie's Meals produces frozen meals, which it sells for $8 each. The company uses the FIFO inventory costing method, and it computes a new monthly fixed manufacturing overhead rate based on th 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 loon to view the data.) Requirements 1. Compute the product cost per meal produced under absorption conting 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 Total product cost $ 4.40 $ 4.00 $ 4.50 $ 4.00 Data Table Requirement 2a. Prepare separate monthly income statements for January and for Februa Louie's Meals Income Statement (Absorption Costing) January February Month Ended Sales 1,400 meals 1,800 meals January 31 February 28 Production 2.000 meals 1,600 meals Sales revenue $ 11,200 $ 14,400 Variable manufacturing expense per meal. 6,160 8,100 Less: Cost of goods sold Sales commission expense per meal. $ Gross profit 5,040 Totalfixed manufacturing overhead 800 Loss: Operating expenses 3,300 4.100 Totalfixed marketing and administrative expenses 500 500 1,740 2,200 Operating income $ $ 4 2 2 6,300 $ $ 800 $ $ $ Louie's Meals produces frozen meals, which it sells for $8 each. The company uses the FIFO inventory costing method, and it computes a new monthly fixed manufacturing overhead rate based on th 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 loon to view the data.) Requirements 1. Compute the product cost per meal produced under absorption conting 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 Total product cost $ 4.40 $ 4.00 $ 4.50 $ 4.00 Data Table Requirement 2a. Prepare separate monthly income statements for January and for Februa Louie's Meals Income Statement (Absorption Costing) January February Month Ended Sales 1,400 meals 1,800 meals January 31 February 28 Production 2.000 meals 1,600 meals Sales revenue $ 11,200 $ 14,400 Variable manufacturing expense per meal. 6,160 8,100 Less: Cost of goods sold Sales commission expense per meal. $ Gross profit 5,040 Totalfixed manufacturing overhead 800 Loss: Operating expenses 3,300 4.100 Totalfixed marketing and administrative expenses 500 500 1,740 2,200 Operating income $ $ 4 2 2 6,300 $ $ 800 $ $ $
