QUESTION 3 20 MARKS Mario Foods produces frozen meals, which sells for $7 each. The company uses the FIFO inventory costing method, and it computes a new monthly fixed manufacturing overhead rate based in the actual number of meals produced that month. All costs and production levels are exactly as planned. The following data are from Mario's Foods' first two months in business: January 1,000 meals February 1,200 meals Sales Production 1,400 meals 1,000 meals Variable manufacturing expense per meal Sales commission expenses $1 per meal $700 Total fixed manufacturing $700 overhead Total fixed marketing and $600 $600 administrative expenses Required: a. Compute the product cost per meal produced under absorption costing and under variable costing based on January and February above. (2 MARKS) b. Prepare separate monthly income statements for January and for February, using the following: i. Absorption costing (9 MARKS) Variable costing (9 MARKS)
