Stella's Foods produces frozen meals that it sells for $$12$ each. The company computes a new monthly fixed manufacturing overhead allocation rate based on the planned number of meals to be produced that month. Assume all costs and broduction levels are exactlv as dlanned. The followina data are from Stella's Foods's first month in business:

Requirement $1.$ Compute the product cost per meal produced under absorption costing and under variable costing

$($Round your answers to the nearest cent.$)$

$\backslash$table$[[,\backslash$table$[[$Absorption$],[$costing$]],\backslash$table$[[$Variable$],[$costing$]]],[$Total product cost per meal,,$]]$

Requirement $2$b$.$ Prepare Stella's Foods's January income statement using variable costing.

Requirement $2$a$.$ Prepare Stella's Foods's January income statement using absorption costing

Stella's Foods

Stella's Foods

Income Statement $($Absorption Costing$)$

Month Ended January $31$

$\backslash$table$[[$Net Sales Revenue$],[$Cost of Goods Sold$],[$Gross Profit$],[$Selling and Administrative Costs$]]$

Contributjon Margin

Fixed Costs

Operating Income

Operating Income

Requirement $3.$ Is operating income higher under absorption costing or variable costing in January?

In January, absorption costing operating income

variable costing operating income.