Ned's Entrees produces frozen meals, which sells for $10 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 the company's first two months in business: (Click the icon to view the data.) Requirements 1. Compute the product cost per meal produced under absorption costing 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 costing. Requirement 1. Compute the product cost per meal produced under absorption costing and under variable costing. Do this first for January and then for February x January Absorption Variable costing costing 4.75 February Absorption Variable costing costing 4.8 Data Table Total product cost 4 Requirement 2a. Prepare separate monthly income statements for January and for February, using absorption costing. January 1.300 meals February 1,600 meals Sales. Ned's Entrees Production 1,600 meals 1,500 meals Income Statement (Absorption Costing) Month Ended 4 $ 4 1 $ 1 January 31 February 28 Variable manufacturing expense per meal. $ Sales commission expense per meal. $ Total fixed manufacturing overhead $ Total fixed marketing and administrative expenses..... $ 1,200 $ 1,200 Sales revenue 13000 6175 16000 76801 800 $ 800 Less Cost of goods sold Gross profit Less: Operating expenses 6825 8320 Print Done Choose from any list or enter any number in the input fields and then continue to the next question. Ned's Entrees produces frozen meals, which it sells for $10 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 productio levels are exactly as planned. The following data are from the company's first two months in business: (Click the icon to view the data.) Requirements 1. Compute the product cost per meal produced under absorption costing 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 costing. Less: Operating expenses Operating income Data Table - X Requirement 2b. Prepare Ned's Entrees' January and February income statements using variable costing. Ned's Entrees February Contribution Margin Income Statement (Variable Costing) Month Ended January 31 February 28 January 1,300 meals Sales 1.600 meals 1,600 meals 1.500 meals 4 $ 4 Less: Production Variable manufacturing expense per meal. $ Sales commission expense per meal. $ Total fixed manufacturing overhead $ Total fixed marketing and administrative expenses ..... $ 1 $ 1 1,200 $ 1,200 800 $ 800 Less: Print Done Choose from any list or enter any number in the input fields and then continue to the next question. Ned's Entrees produces frozen meals, which it sells for $10 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 the company's first two months in business: Click the icon to view the data.) Requirements Compute the product cost per meal produced under absorption costing 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 costing. 1. Less Requirement 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. In January, absorption costing operating income variable costing income. This is because units produced were units sold. V costs in the units of ending inventory. These costs will not be until those units are sold. Deferring these costs to the future Absorption costing defers some of January's absorption costing income. In February, absorption costing operating income variable costing operating income. This is because units produced were V units sold for the month. As inventory as was the case in this February, January's costs that absorption costing assigned to that inventory are expensed in This February's absorption costing income Choose from any list or enter any number in the input fields and then continue to the next question. ? Ned's Entrees produces frozen meals, which sells for $10 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 the company's first two months in business: (Click the icon to view the data.) Requirements 1. Compute the product cost per meal produced under absorption costing 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 costing. Requirement 1. Compute the product cost per meal produced under absorption costing and under variable costing. Do this first for January and then for February x January Absorption Variable costing costing 4.75 February Absorption Variable costing costing 4.8 Data Table Total product cost 4 Requirement 2a. Prepare separate monthly income statements for January and for February, using absorption costing. January 1.300 meals February 1,600 meals Sales. Ned's Entrees Production 1,600 meals 1,500 meals Income Statement (Absorption Costing) Month Ended 4 $ 4 1 $ 1 January 31 February 28 Variable manufacturing expense per meal. $ Sales commission expense per meal. $ Total fixed manufacturing overhead $ Total fixed marketing and administrative expenses..... $ 1,200 $ 1,200 Sales revenue 13000 6175 16000 76801 800 $ 800 Less Cost of goods sold Gross profit Less: Operating expenses 6825 8320 Print Done Choose from any list or enter any number in the input fields and then continue to the next question. Ned's Entrees produces frozen meals, which it sells for $10 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 productio levels are exactly as planned. The following data are from the company's first two months in business: (Click the icon to view the data.) Requirements 1. Compute the product cost per meal produced under absorption costing 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 costing. Less: Operating expenses Operating income Data Table - X Requirement 2b. Prepare Ned's Entrees' January and February income statements using variable costing. Ned's Entrees February Contribution Margin Income Statement (Variable Costing) Month Ended January 31 February 28 January 1,300 meals Sales 1.600 meals 1,600 meals 1.500 meals 4 $ 4 Less: Production Variable manufacturing expense per meal. $ Sales commission expense per meal. $ Total fixed manufacturing overhead $ Total fixed marketing and administrative expenses ..... $ 1 $ 1 1,200 $ 1,200 800 $ 800 Less: Print Done Choose from any list or enter any number in the input fields and then continue to the next question. Ned's Entrees produces frozen meals, which it sells for $10 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 the company's first two months in business: Click the icon to view the data.) Requirements Compute the product cost per meal produced under absorption costing 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 costing. 1. Less Requirement 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. In January, absorption costing operating income variable costing income. This is because units produced were units sold. V costs in the units of ending inventory. These costs will not be until those units are sold. Deferring these costs to the future Absorption costing defers some of January's absorption costing income. In February, absorption costing operating income variable costing operating income. This is because units produced were V units sold for the month. As inventory as was the case in this February, January's costs that absorption costing assigned to that inventory are expensed in This February's absorption costing income Choose from any list or enter any number in the input fields and then continue to the next