Question

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

Answer 1

Please give positive ratings so I can keep answering. It would help me a lot. Thanks!

Maria​'s Foods
Absorption costing			Variable costing
Total fixed manufacturing overhead	385.00		Product Cost per meal
Production (meals)	1,100.00		Variable manufacturing cost	6.00
Fixed manufacturing overhead per meal	0.35		Sales commission cost per meal	2.00
			Product Cost per meal	8.00
Product Cost per meal
Variable manufacturing cost	6.00		Calculation of total costs	Per unit	Total
Fixed manufacturing overhead	0.35		Units sold	800.00
Product Cost per meal	6.35		Variable manufacturing cost	6.00	4,800.00
			Sales commission cost per meal	2.00	1,600.00
Calculation of total costs	Per unit	Total	Sell price	14.00	11,200.00
Units sold	800.00
Variable manufacturing cost	6.00	4,800.00	Income Statement
Fixed manufacturing overhead	0.35	280.00	Sales		$ 11,200.00
Sales commission cost per meal	2.00	1,600.00	Less: Variable Costs
Sell price	14.00	11,200.00	Variable manufacturing cost		4,800.00
			Sales commission cost		1,600.00
Income Statement			Contribution		4,800.00
Sales		$   11,200.00	Less: Operating expenses
Less: Cost of goods sold			Fixed manufacturing overhead		385.00
Variable manufacturing cost		4,800.00	Total fixed and administrative costs		350.00
Fixed manufacturing overhead		280.00	Net profit		4,065.00
Gross profit		6,120.00
Less: Operating expenses
Sales commission cost		1,600.00
Total fixed and administrative costs		350.00
Net profit		4,170.00