Question
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
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: (Click the icon to view the data.) Read the requirements. Requirement 2a. Prepare Maria's Foods's January income statement using absorption costing. Maria's Foods Income Statement (Absorption Costing) Month Ended January 31, 2018 Data table Net Sales Revenue Cost of Goods Sold Contribution Margin Selling and Administrative Costs Operating Income Requirement 2b. Prepare Maria's Foods's January inco Maria's Foods Income Statement (Variable Costing) Month Ended January 31, 2018 Units produced and sold: Sales Production January 2018 1,000 meals 1,400 meals 6 2 700 Total fixed selling and administrative costs 550 Variable manufacturing cost per meal Sales commission cost per meal Total fixed manufacturing overhead Net Sales Revenue Variable Costs Contribution Margin Selling and Administrative Costs Print Done Operating Income Requirement 3. Is operating income higher under absorption costing or variable costing in January? In January, absorption costing operating income variable costing operating income.
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