Martys 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 Martys Entrees first two months in business:

	January	February
Sales Production Variable manufacturing expense per meal Sales commission expense per meal Total fixed manufacturing overhead Total fixed marketing and administration expense	1,400 meals 2,000 meals $5 $1 $700 $500	$1,800 $1,400 $5 $1 $700 $500

Based on the given information, answer the following questions:

Compute the product cost per meal produced under absorption costing and under variable costing. Do this first for January and then for February.

Prepare separate monthly income statements for January and for February, using absorption costing and variable costing.

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.