Mario's Foods produces frozen meals, which it sells for $9 each. The company uses the FIFO invenotry costing method, and it computes a new monthy fixed manufactoring overhead rate based on the actual number of meals produced that month. All cost and production levels are exactly as planned. The following data are from the company's first two months in business:

	JAN	FEB
Sales........................	1,600 meals	1,900 meals
Production...............	2,000 meals	1,600 meals
Variable manufactoring expense per meal	$5	$5
Sales commision expense per meal	$2	$2
Total fixed manfucuring overhead	$800	$800
Total fixed makerting and administrative expenses	$700	$700

Requirements:

1. Compute the product cost per meal produced underabsorption costing and under variable costing. Do this first for January, and then for Febuary.

2. Prepare seperate monthly income statements for January and for February, using the following:

a. Absorrption 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.

Requirement 1. Compute the product cost per meal under absortion costing and under variable costing. Do this first for January and the Febuary

	JAN		FEB
	Absorbtion Costing	Variable Costing	Absorption Costing	Variable Costing
Total Product cost

Requirement 2a. Prepare seperate monthly income statements for January and for Feb, using absorption costing

Mario's Foods o

Contribution Margin Income Statement (variable costing)

Month Ended

BELOW ARE THE ONLY OPTIONS TO MAKE INCOME STATEMENTS FOR BOTH STATEMENTS FOR 2A AND 2B

Contribution margin, Cost of goods sold, fixed expenses, fixed manufactoring overhead, fixed opearting expenses, gross profit, operating expense, sales revenue, variable cost of goods solds, variable expenses, variable operating expenses

		Jan 31	Feb 31
Less:
Less:

Requirements 2b. Prepare Mario's Foods' January February income statements using variable costing.

Marios's Food Cotribution Margin Income Statement (variable Costing_ Month Ended)

	Jan 31	Feb 28
Less:
Less: