Question 2 Gia's Foods produces frozen meals, which it sells for $8 each. The company computes a new monthly fixed manufacturing overhead rate based on the planned number of meals to be produced that month. All costs and production levels are exactly as planned. The following data are from Gia's Foods first month in business. Sales Production Variable manufacturing cost per meal Sales commission cost per meal Total fixed manufacturing overhead Total fixed marketing and administrative costs January 2007 1,000 meals 1,400 meals $4.00 $1.00 $700 $600 Requirements: i) Compute the product cost per meal produced under absorption costing and under variable costing. ii) Prepare the income statement for January 2007 using variable costing iii) List three situations in which marginal costing, as a technique, aids decision-making.
Question 2 Gia's Foods produces frozen meals, which it sells for $8 each. The company computes a new monthly fixed manufacturing overhead rate based on the planned number of meals to be produced that month. All costs and production levels are exactly as planned. The following data are from Gia's Foods first month in business. Sales Production Variable manufacturing cost per meal Sales commission cost per meal Total fixed manufacturing overhead Total fixed marketing and administrative costs January 2007 1,000 meals 1,400 meals $4.00 $1.00 $700 $600 Requirements: i) Compute the product cost per meal produced under absorption costing and under variable costing. ii) Prepare the income statement for January 2007 using variable costing iii) List three situations in which marginal costing, as a technique, aids decision-making.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please note before answer the questions.
This discussion focuses on Marginal costing. In preparing your responses, please be reminded of the following:
Beginning Units + Units Produced - Ending Units = Units Sold
Ending Units = Beginning Units + Units Produced - Units Sold
ü COGM = Beginning WIP Inventory + TMC - Ending WIP Inventory.
ü COGS = Beginning FG Inventory + COGM - Ending FG Inventory.
Where there is neither beginning nor ending WIP, COGM = TMC.
ü COGS = Beginning FG Inventory + TMC - Ending FG Inventory
This is an important topic so taking part in the discussion solidifies your understanding or lack of understanding for the topic.
Transcribed Image Text:Question 2
Gia's Foods produces frozen meals, which it sells for $8 each. The company computes a new
monthly fixed manufacturing overhead rate based on the planned number of meals to be
produced that month. All costs and production levels are exactly as planned. The following
data are from Gia's Foods first month in business.
Sales
Production
Variable manufacturing cost per meal
Sales commission cost per meal
Total fixed manufacturing overhead
Total fixed marketing and administrative costs
January 2007
1,000 meals
1,400 meals
$4.00
$1.00
$700
$600
Requirements:
Compute the product cost per meal produced under absorption costing and under
variable costing.
i)
ii)
Prepare the income statement for January 2007 using variable costing
iii)
List three situations in which marginal costing, as a technique, aids decision-making.
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