Question

Show All Your Works For Your Response: Fill Out 3 White Blanks Below Larry's Foods produces frozen meals, which it sells for $7 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: 0 Data Table - X January Sales ...... 1,400 meals 2,000 meals February 1,600 meals 1,400 meals $ 3 Production ..... Variable manufacturing expense per meal ....... Sales commission expense per meal .......... Total fixed manufacturing overhead ....... ...............$ Total fixed marketing and administrative expenses ....$ 700 600 $ $ 700 600 Print Done Income Statement (Absorption Costing) Month Ended January 31 February 28 Sales revenue $ 9,800 $ 11,200 Less: Cost of goods sold 4,690 Gross profit 5,110 Less: Operating expenses 2,000 2.200 Operating income 3,110

Answer 1

Solution

Income Statement
Month Ended
	January 31..	February 28..
Sales revenue	$       9,800.00	$ 11,200.00
Less: Cost of goods sold	$       4,690.00	$     5,510.00
Gross profit	$       5,110.00	$     5,690.00
Less: Operating expenses	$       2,000.00	$     2,200.00
Operating income	$       3,110.00	$     3,490.00

Working

Cost of goods sold
Beginning inventory (3.35 x 600)	$       2,010.00
Cost of goods manufactured (1400 x 3.5)	$       4,900.00
Available for sale	$       6,910.00
Less: Ending Inventory (400 x 3.5)	$       1,400.00
Cost of goods sold	$       5,510.00

.

Cost per unit calculation	Beginning	Ending and current month
Variable manfacturing expense	$               3.00	$             3.00
Fixed manufacturing overhead per unit (beginning)[700/2000]	$               0.35
Fixed manufacturing overhead per unit (current and Ending)[700/1400]		$             0.50
Total cost per unit	$               3.35	$             3.50
Units in Beginning inventory [2000-1400]	600
Units in Ending inventory [600+1400-1600]		400