Question

This Question: 30 pts 7 of 7 (1 complete) This Test: 200 pts possible 0 Maria's Foods produces frozen meals that it sells for $9 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 Maria's Foods's first month business Click the icon to view the data) Read the requirements. Total product cost per meal Requirement 2a. Prepare Maria's Foods's January income statement using absorption costing. Marla's Foods Income Statement (Absorption Costing) Month Ended January 31, 2018 Operating Income Requirement 2b. Prepare Maria's Foods's January income statement using variable costing. Maria's Foods Income Statement (Variable Costing) Month Ended January 31, 2018 Oporating Income Requirement 3. Is operating income higher under absorption costing or variable costing in January? In January, absorption costing operating income y variable costing operating incomo. Choose from any list or enter any number in the input fields and then continue to the next question. ?

Answer 1

1.

Product Cost
	Absorption Costing	Variable Costing
Variable Manufacturing Cost	$            4.00	$           4.00
Fixed Manufacturing Overhead	$            0.60
Total Product Cost	$            4.60	$           4.00

2a.

Income Statement (Absorption)
Sales Revenue	$          8,550	=950*9
Cost of Goods Sold	$          4,370	=950*4.6
Gross Profit	$          4,180
Selling and Administrative costs	$          1,250	=950*1+300
Net Operating Income	$          2,930

2b.

Income Statement (Variable)
Sales Revenue	$          8,550	=950*9
Variable Costs	$          4,750	=950*5
Contribution Margin	$          3,800
Fixed Costs	$             990	=690+300
Net Operating Income	$          2,810

3.
Absorption Costing Income is higher

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