Question

Rosetla's Foods produces frozen meals that it sells for S8 each. The company computes a new monthly fixed manufacturing overhead allocation rate based production levels are exactly as planned. The following data are from Rosetta's Foods's first month in business: the planned number of meals to be produced that month. Assurme all costs and (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. (Round your answers to the nearest cent.) January 2018 X Requirements Absorplion Variable costing costing Total product cost per meal 1. Compute the product cost per meal produced under absorption costing and under variable costing. 2. Prepare income statements for January 2018 using: a. absorplion oosting Requirement 2a. Prepare Rosetta's Foods's January income statement using absorption costing. Rosetta's Foods Income Statement (Absorption Costing) 3. Is operating income higher under absorption costing or variable costing in January? Month Ended January 31, 2018 Print Done Operating Income Data Table. Requirement 2b. Prepare Rosetta's Foods's January income statement using variable costing. Rosetta's Foods January 2018 Income Statement (Variable Costing) Month Ended January 31, 2018 Units produced and sold: Sales 1,150 meals Production .350 meals Variable manufacturing cost per meal 4 Sales commission cost per meal 540 Total fixed manufacturing overhead Operating Income Total fixed selling and administrative costs 400 Requirement 3. Is operating income higher under absorption costing or variable costing in January? variable costing operating income. In January, absorption costing operating income Print Done

Answer 1

	MANUFACTURING AND DETAILS ARE AS BELOW
	Unit Produced =	1,350	Units
	Unit Sold =	1,150	Units
	Closing Stock	200	Units
	Selling Price Per unit	$                            8.00	Per Units
	Fixed Selling and administration Expenses	$                             540
	STEP : 1
	CALCULATION OF FIXED OVERHEAD RECOVERY RATE FOR ABSORPTION COSTING
	Fixed Manufacturing Overhead =	$                             540
	"/ " By Units Produced =	$                          1,350
	Fixed overhead recovery Rate =	$                            0.40
	STEP : 2
	CALCUALTION OF cost of production units by using absorption and variable Costing
	Answer =1)
	Particulars	Absorption Costing Amount	Variable Costing Amount
	Variable Manufacturing Cost per Meal	$                            1.00	$                            1.00
	Fixed Manufacturing Overhead ($540 / 1350 units)	$                            0.40	$                                 -
	Cost of Production per unit	$                            1.40	$                            1.00
	Answer = Total Production cost per meanl	$                            1.40	$                            1.00
	Answer =2A)
	Absorption Costing
	ABOSRPTION COSTING INCOME STATEMENTS	Absorption Costing
	Particulars	Amount
	Sales (1150 X $ 8)	$                          9,200
	Cost of Goods Sold
	Beginning inventory	$                                 -
	Cost of Goods Manufactured (1350 Units X $ 1.4 Per unit)	$                          1,890
	Less: Ending Inventory (200 units $ 1.40 Per Unit)	$                             280
	Cost of Goods Sold	$                          1,610
	Gross Profit	$                          7,590
	Less : Opereating Expenses
	Fixed selling and adminsitrative exenses	$                             400
	Variable Operating Expenses	$                          1,150
	Net Income	$                          6,040
	Answer =2B)
	VARIABLE COSTING INCOME STATEMENTS	Variable Costing
	Particulars	Amount
	Sales	$                          9,200
	Cost of Goods Sold
	Beginning inventory	$                                 -
	Cost of Goods Manufactured (1350 Units X $ 1 Per unit)	$                          1,350
	Less: Ending Inventory (200 units $ 1 Per Unit)	$                             200
	Cost of Goods Sold	$                          1,150
	Variable Selling Expneses	$                          1,150
	Contribution Margin	$                          6,900
	Less: Fixed Manufacturing overhead	$                             540
	Less : Fixed Selling and administgrative expenses	$                             400
	Net Income	$                          5,960
	Answer =3)
	In january absorption costing operating income higher than variable costing operating income