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Mark's Meals 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 the company's first two months in business (Click the icon to view the data) Read the requirements 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 Variable Absorption costing costing 1 Total product cost ■ 70 Requirement 2a. Prepare separate monthly income statements for January and for February, using absorption costing T Less: Less: Less: Mark's Meals Income Statement (Absorption Costing) Month Ended Less Absorption costing January 31 Requirement 2b. Prepare Mark's Meals' January and February income statements using variable costing Mark's Meals Contribution Margin Income Statement (Variable Costing) Month Ended Variable costing February 28 January 31 February 28 Data table Sales... Production... January 1,600 meals 2,000 meals $3 Variable manufacturing expense per meal $1 Sales commission expense per meal. Total fixed manufacturing overhead........... $800 Total fixed marketing and administrative expenses.. $600 Print Done February 1,800 meals 1.600 meals $3 $1 $800 $600

Mark's Meals 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 the company's first two months in business (Click the icon to view the data) Read the requirements 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 Variable Absorption costing costing 1 Total product cost ■ 70 Requirement 2a. Prepare separate monthly income statements for January and for February, using absorption costing T Less: Less: Less: Mark's Meals Income Statement (Absorption Costing) Month Ended Less Absorption costing January 31 Requirement 2b. Prepare Mark's Meals' January and February income statements using variable costing Mark's Meals Contribution Margin Income Statement (Variable Costing) Month Ended Variable costing February 28 January 31 February 28 Data table Sales... Production... January 1,600 meals 2,000 meals $3 Variable manufacturing expense per meal $1 Sales commission expense per meal. Total fixed manufacturing overhead........... $800 Total fixed marketing and administrative expenses.. $600 Print Done February 1,800 meals 1.600 meals $3 $1 $800 $600

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 3CE: Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month...
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Mark's Meals 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 the company's first two months in business: (Click the icon to view the data.) Read the requirements. 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. February January Less Less: Absorption costing Total product cost Requirement 2a. Prepare separate monthly income statements for January and for February, using absorption costing. Less: Variable costing Less: Absorption costing Mark's Meals Income Statement (Absorption Costing) Month Ended Variable costing Requirement 2b. Prepare Mark's Meals' January and February income statements using variable costing. Mark's Meals Contribution Margin Income Statement (Variable Costing) Month Ended January 31 February 28 January 31 February 28 Data table Sales.... Production.. January 1,600 meals 2.000 meals $3 $1 Variable manufacturing expense per meal. Sales commission expense per meal.. Total fixed manufacturing overhead $800 Total fixed marketing and administrative expenses .. $600 Print Done February 1,800 meals 1,600 meals $3 $1 $800 $600 - X
Transcribed Image Text:Mark's Meals 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 the company's first two months in business: (Click the icon to view the data.) Read the requirements. 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. February January Less Less: Absorption costing Total product cost Requirement 2a. Prepare separate monthly income statements for January and for February, using absorption costing. Less: Variable costing Less: Absorption costing Mark's Meals Income Statement (Absorption Costing) Month Ended Variable costing Requirement 2b. Prepare Mark's Meals' January and February income statements using variable costing. Mark's Meals Contribution Margin Income Statement (Variable Costing) Month Ended January 31 February 28 January 31 February 28 Data table Sales.... Production.. January 1,600 meals 2.000 meals $3 $1 Variable manufacturing expense per meal. Sales commission expense per meal.. Total fixed manufacturing overhead $800 Total fixed marketing and administrative expenses .. $600 Print Done February 1,800 meals 1,600 meals $3 $1 $800 $600 - X
Mark's Meals 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 the company's first two months in business: (Click the icon to view the data.) Read the requirements. Less Less: Less: Requirement 2b. Prepare Mark's Meals' January and February income statements using variable costing. Less: Montn Endea Mark's Meals Contribution Margin Income Statement (Variable Costing) Month Ended January 31 February 28 As inventory ▼ In February, absorption costing operating income January 31 February 28 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 ▼costs in the units of ending inventory. These costs will not be variable costing operating income. This is because units produced were as was the case in this February, January's G Data table costs that absorption costing assigned to that inventory are expensed in Sales... Production.. Variable manufacturing expense per meal.. Sales commission expense per meal until those units are sold. Deferring these units sold for the month. Total fixed manufacturing overhead $800 Total fixed marketing and administrative expenses.. $600 This Print January 1.600 meals 2.000 meals Done $3 $1 ▼ February's absorption costing income. costs to the future February 1,800 meals 1,600 meals $3 $1 $800 $600 January's absorption costing income.
Transcribed Image Text:Mark's Meals 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 the company's first two months in business: (Click the icon to view the data.) Read the requirements. Less Less: Less: Requirement 2b. Prepare Mark's Meals' January and February income statements using variable costing. Less: Montn Endea Mark's Meals Contribution Margin Income Statement (Variable Costing) Month Ended January 31 February 28 As inventory ▼ In February, absorption costing operating income January 31 February 28 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 ▼costs in the units of ending inventory. These costs will not be variable costing operating income. This is because units produced were as was the case in this February, January's G Data table costs that absorption costing assigned to that inventory are expensed in Sales... Production.. Variable manufacturing expense per meal.. Sales commission expense per meal until those units are sold. Deferring these units sold for the month. Total fixed manufacturing overhead $800 Total fixed marketing and administrative expenses.. $600 This Print January 1.600 meals 2.000 meals Done $3 $1 ▼ February's absorption costing income. costs to the future February 1,800 meals 1,600 meals $3 $1 $800 $600 January's absorption costing income.
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