stella'sFoods produces frozen meals that it sells for$11each. 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 fromStella'sFoods's first month in business units produced and sold sales 800 meals production 1100 meals $ variable manufacturing of meals 5 sales commission cost per meal 1 total fixed manufacturing overhead 385 total fixed selling and administrative cost 700 REQUIREMENTS Compute the product cost per meal produced under absorption costing and under variable costing. (Round your answers to the nearest cents Prepare income statements for January 2018 using: a. absorption costing. b. variable costing. Is operating income higher under absorption costing or variable costing in January?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

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stella'sFoods produces frozen meals that it sells for$11each. 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 fromStella'sFoods's first month in business

units produced and sold

sales 800 meals

production 1100 meals

variable manufacturing of meals 5

sales commission cost per meal 1

total fixed manufacturing overhead 385

total fixed selling and administrative cost 700

REQUIREMENTS

Compute the product cost per meal produced under absorption costing and under variable costing. (Round your answers to the nearest cents
Prepare income statements for
January

2018
using:

a. absorption costing.

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

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