Owen's Foods produces frozen meals, which it sels for $7 each. The company uses the FIFO Inventory costing method, and it computes a new monthly fixed manufacturing ove teed rate based on the actual number of meals produced that month. All costs and production levels are exactly was planned. The following cala are from the company's first two months in business: (Click the icon to view the data) Requirements 1. Compute the product cast 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 coating b. Variable casting, 3. Is operating income higher under absorption coeting or variable costing in January? In February? Explain the pattern of differences in operating income seed on absorption coating versus variable coating. Requirement 1. Compute the product cost per meal procuced under absorption costing and under variable coating. Do this first for January and then for February Data Table January February Absorption Variable Absorption Variable costing coating costing costing Total product cost 3.36 31 3.50 Requirement 2. Prepare separate monthly income statements for January and for February, using absorption costing. Owen's Foods Income Statement (Absorption Costing) Month Ended January 31 February 28 Sales revende 10500 | 12600 Less: Cost of goods sold 5025 Groesprofil Less: Operating expenses 1800 2100 Operating income January 1,500 meals 2,000 moale S February 1.800 meals 1,400 meals 3 3 Salee...... Production Variable manufacturing expense per meal Sales commissioni expense per meal. Totalfixed manufacturing verhead ...... Toled rursaling and dininistrative expenses us 3 1 S 1 3 700 S 700 3 300 S 300 Print Done Requirement 2b. Prepare Owen's Foods' January and February income statements using variable costing. Owen's Foods Contribution Margin Income Statement (Variable Casting) Month Ended January 31 February 28 Less: Choose from any list or enter any number in the input fields and then continue to the next question. ? ONeri's Foous produces frozen meals, which i sells for 37 each. The company uses the FIFO inventory cusing method, and il vandutes a new monthly fixed manufacluring overned rate based on the actual muruler of meals produced that month. Al wels and procuclion levels are exacy as planned. The following data are from the company's first two months in business (Cick the icon to view the date. Requiremento 1. Compute the product cost per meal produced under saration casting and under var anle costing. Do this first for January and then for February 2. Prepare separate monthly incorne salernents for January and for February, using the folowing: a. Absorption coating b. Variable casting 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 abeorpion costing verbus variable costing Lees: Operating expensee 1800). 2100 Operating income Requirement Zb. Prepare Ann's Foods' January and February income statements using variable coating. i Data Table Owen's Foods Contribution Margin Income Statement (Variable Casting) Month Ended January 31 February 28 January 1,500 meals February 1.800 meals = 2.000 meals 1.400 meal LASS: S 3 S Sales. Production. Variable manufacturing expense per meal Sales commission expense per meal.. Total lixed manufacturing overhead ............ Total fixed marketing and adminierave expenses S 1 1 700 S s S III 700 300 s 300 S Less: III Print Done III Requirement 3. Is operating income higher under shorption costing or variable costing in January? in February? Explain the pattem of differences in operating income based on absorption costing versus variable costing In January, aberp.ion coeling operating invoine variable cusing income. This is because units produced vere | urlits sold. Ahsorption casting doters some of costs in the units of ending inventory. These nosis wil not be url than units are sold. Datorting these absorption culing noor pasts to the future January's In Frbrary, Absorption casting apating income y variable costing aperating income. This is because units produced were units said for the month A Invertory as was the cape 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