Stella's Foods produces frozen meals that it sells for $$9$ 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 production levels are exactly as planned. The following data are from Stella's Foods's first month in business:

$($Click the icon to view the data.$)$

Requirements

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

Prepare income statements for January using:

a$.$ absorption costing.

b$.$ variable tosting.

Is operating income higher under absorption costing or variable costing in January?