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. January February Total product cost Less: Requirement 2a. Prepare separate monthly income statements for January and for February, using absorption costing. Jason's Meals Income Statement (Absorption Costing) Month Ended Less: Absorption Variable Absorption costing costing costing Less: Less: Requirement 2b. Prepare Jason's Meals' January and February income statements using variable costing. Jason's Meals Contribution Margin Income Statement (Variable Costing) Month Ended Variable costing January 31 costs to the future In February, absorption costing operating income February 28 January 31 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. Absorption costing defers some of February 28 costs in the units of ending inventory. These costs will not be January's absorption costing income. variable costing operating income. This is because units produced were until those units are sold. Deferring these units sold for the month. Data table Sales..... Production.... January 1,000 meals 1,500 meals Variable manufacturing expense per meal.. Sales commission expense per meal.. Total fixed manufacturing overhead ... $900 Total fixed marketing and administrative expenses .. $700 Print $3 $1 Done February 1,400 meals 1,200 meals $3 $1 $900 $700 In February, absorption costing operating income As inventory costing income. variable costing operating income. This is because units produced were as was the case in this February, January's units sold for the month. costs that absorption costing assigned to that inventory are expensed in This February's absorption