Marty's Entrees produces frozen meals, which it sells for $9 each. The company uses the FIFO inventory costing method, and it computes a new, monthly, fixed manufacturing overhead rate based on the actual number of meals produced that month. All costs and production levels are exactly as planned.
The following data are from Marty's Entrees' first two months in business: January-February Sales Production Variable manufacturing expense per meal Sales commission expense per meal Total fixed manufacturing overhead Total fixed marketing & administrative expenses 1,400 meals 2,000 meals $5 $1 $700 $500 1,800 meals 1,400 meals $5 $1 $700 $500
Compute the product cost per meal produced under absorption costing and under variable costing.
Based on the given information, answer the following questions:
- Prepare separate monthly income statements for January and for February, using absorption.
- Do this first for January and then for February.
- Is operating income higher under absorption costing or variable costing in January? In February? Costing and variable costing.
- Explain the pattern of differences in operating income based on absorption costing versus variable costing.
- Submit the responses in a Microsoft Word document meeting the following criteria: o Font: Arial, Size: 12 point o Length: 2-3 pages
- Submit the calculations in a Microsoft Excel file, showing step-by-step calculations.
- Answer each problem in detail with conclusions and results.
- Submission Requirements: