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Maria's Foods produces frozen meals that it sells for $14 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 in business: Units produced and sold for January 2018: Sales=800meals Production=1100 meals Variable manufacturing cost per meal =$6 Sales commission cost per meal=$2 Total fixed manufacturing overhead=$385 Total fixed and administrative costs=350 REQUIREMENTS: 1. Compute the product cost per meal produced under absorption costing and under variable costing. 2. Prepare income statements for January 2018 using: a) absorption costing b)variable costing

Maria's Foods produces frozen meals that it sells for $14 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 in business: Units produced and sold for January 2018: Sales=800meals Production=1100 meals Variable manufacturing cost per meal =$6 Sales commission cost per meal=$2 Total fixed manufacturing overhead=$385 Total fixed and administrative costs=350 REQUIREMENTS: 1. Compute the product cost per meal produced under absorption costing and under variable costing. 2. Prepare income statements for January 2018 using: a) absorption costing b)variable costing

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Maria's Foods produces frozen meals that it sells for $14 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 in business: Units produced and sold for January 2018: Sales=800meals Production=1100 meals Variable manufacturing cost per meal =$6 Sales commission cost per meal=$2 Total fixed manufacturing overhead=$385 Total fixed and administrative costs=350 REQUIREMENTS: 1. Compute the product cost per meal produced under absorption costing and under variable costing. 2. Prepare income statements for January 2018 using: a) absorption costing b)variable costing
Transcribed Image Text:Maria's Foods produces frozen meals that it sells for $14 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 in business: Units produced and sold for January 2018: Sales=800meals Production=1100 meals Variable manufacturing cost per meal =$6 Sales commission cost per meal=$2 Total fixed manufacturing overhead=$385 Total fixed and administrative costs=350 REQUIREMENTS: 1. Compute the product cost per meal produced under absorption costing and under variable costing. 2. Prepare income statements for January 2018 using: a) absorption costing b)variable costing
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