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
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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.
January 2007
Sales
Production
Variable manufacturing cost per meal
Sales commission cost per meal
Total fixed manufacturing overhead
Total fixed marketing and administrative costs
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.
Prepare the income statement for January 2007 using variable costing
ii)
iii)
List three situations in which marginal costing, as a technique, aids decision-making.
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