Maria's Foods produces frozen meals that it sells for $14 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 Maria's Foods's first month in business:

Units produced and sold for January 2018:

Sales=800meals

Production=1100 meals

Variable manufacturing cost per meal =$6

Sales commission cost per meal=$2

Total fixed manufacturing overhead=$385

Total fixed and administrative costs=350

REQUIREMENTS:

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