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Viviana's Foods produces frozen meals that it sells for $15 each. The company computes a new monthly fixed manufacturing overhead allocation rate based on the
Viviana's Foods produces frozen meals that it sells for $15 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 Viviana's Foods's first month in business (Click the icon to view the data.) Read the requirements. Requirement 2a. Prepare Viviana's Foods's January income statement using absorption costing. Requirement 2b. Prepare Viviana's Foods's January income statement using variable costing Requirement 3. Is operating income higher under absorption costing or variable costing in January? In January, absorption costing operating income variable costing operating income. January Units produced and sold: Sales 950 meals Production 1,150 meals Variable manufacturing cost per meal $ 6 Sales commission cost per meal Total fixed manufacturing overhead 690 Total fixed selling and administrative costs 800
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