Nicky's Entrees produces frozen meals, which it sells for $10 each. The company uses the FIFO inventory costing method, and it computes a new monthly fixed manufacturing overhead rate based on the actual number of meals produced that month. All costs and production levels are exactly as planned. The following data are from the company's first two months in business: (Click the icon to view the data.) Read the requirements. Requirement 1. Compute the product cost per meal produced under absorption costing and under variable costing. Do this first for January and then for February. Requirement 2a. Prepare separate monthly income statements for January and for February, using absorption costing. Requirement 2b. Prepare Nicky's Entrees' January and February income statements using variable costing. Data table Requirements 1. Compute the product cost per meal produced under absorption costing and under variable costing. Do this first for January and then for February. 2. Prepare separate monthly income statements for January and for February, using the following: a. Absorption costing b. Variable costing. 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. Nicky's Entrees produces frozen meals, which it sells for $10 each. The company uses the FIFO inventory costing method, and it computes a new monthly fixed manufacturing overhead rate based on the actual number of meals produced that month. All costs and production levels are exactly as planned. The following data are from the company's first two months in business: (Click the icon to view the data.) Read the requirements. Requirement 2b. Prepare Nicky's Entrees' January and February income statements using variable costing. Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In January, absorption costing operating income variable costing income. This is because units produced were units sold. Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In January, absorption costing operating income variable costing income. This is because units produced were units sold. Absorption costing defers some of costs in the units of ending inventory. These costs will not be until those units are sold. Deferring these costs to the future January's absorption costing income. In February, absorption costing operating income variable costing operating income. This is because units produced were units sold for the month. As inventory as was the case in this February, January's costs that absorption costing assigned to that inventory are expensed in This February's absorption costing income. Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In January, absorption costing operating income variable costing income. This is because units produced were units sold. Absorption costing defers some of costs in the units of ending inventory. These costs will not be until those units are sold. Deferring these January's absorption costing income. equals In February, absorption costing operating income costing operating income. This is because units produced were units sold for the month. As inventory , as was the case in this costs that absorption costing assigned to that inventory are expensed in . This is less than February's absorption costing incon Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In January, absorption costing operating income variable costing income. This is because units produced were units sold. Absorption costing defers some of costs in the units of ending inventory. The until those units are sold. Deferring these costs to the future January's absorption costing income. In February, absorption costing operating income variable costing operating income. This is because units prod units sold for the month. As inventory as was the case in this February, January's costs that absorptio It inventory are expensed in . This February's absorption costing income. Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In January, absorption costing operating income variable costing income. This is because units produced were units sold. Absorption costing defers some of costs in the units of ending inventory. These costs will not be until those units are sold. Deferring these ) the future January's absorption costing income. In February, absorption costing ope variable costing operating income. This is because units produced were units sold for the month. As inventory , as was tr January's costs that absorption costing assigned to that inventory are expensed in . This February's absorption Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In January, absorption costing operating income variable costing income. This is because units produced were units sold. Absorption costing defers some of costs in the units of ending inventory. These costs will not be until those units are sold. Deferring these absorption costing income. In February, absorption costing operating income ome. This is because units produced were units sold for the month. fixed manufacturing overhead As inventory , as was the case in this costs that absorption costing assigned to that inventory are expensed in This nonmanufacturing February's absorption costing incon variable manufacturing overhead Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In January, absorption costing operating income variable costing income. This is because units produced were units sold. Absorption costing defers some of costs in the units of ending inventory. These costs will not be until those units are sold. Deferring these costs to the future January's absorption costing income. In February, absorption costing operating income variable costing operating income. This is because units produced were th. As inventory as was the case in this February, January's costs that absorption costing assigned t ed in This February's absorption costing income. Requirement 3. Is operating income higher under ariable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. equals In January, absorption costing operating income sting income. This is because units produced were units sold. exceeds Absorption costing defers some of costs in the units of ending inventory. These costs will not be until those units are sold. Deferring these is less than January's absorption costing income. In February, absorption costing operating income variable costing operating income. This is because units produced were units sold for the month. As inventory as was the case in this February, January's costs that absorption costing assigned to that inventory are expensed in . This February's absorption costing income. Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of come based on absorption costing versus variable costing. In January, absorption costing operating income variable costing income. This is because units produced were Absorption costing defers some of costs in the units of ending inventory. These costs wi until those units are sold. Deferring these costs to the future January's absorption costing income. In February, absorption costing operating income variable costing operating income. This is because units produced were units sold for the month. As inventory as was the case in this February, January's costs that absorption costing assigned to that inventory are expensed in This February's absorption costing income. Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In January, absorption costing operating income variable ced were units sold. fixed manufacturing overhead Absorption costing defers some of ntory. These costs will not be until those units are sold. Deferring these costs to the future nonmanufacturing some. In February, absorption costing operating income variabl variable manufacturing overhead units produced were units sold for the month. As inventory as was the case in this February, January's costs that absorption costing assigned to that inventory are expensed in This February's absorption costing income. Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In January, absorption costing operating income variable costing income. This is because units produced were units sold. Absorption costing defers some of costs in the units of ending inventory. These costs will not be until those units Deferring these costs to the future January's absorption costing income. In February, absorption costing operating income variable costing operating income. This is because units produced were units sold for the month. As inventory as was the case in this February, January's costs that absorption costing assigned to that inventory are expensed in This February's absorption costing income. Requirement 3. Is operating income higher under absorption costing or variable costing in January? In February? Explain the pattern of differences in operating income based on absorption costing versus variable costing. In January, absorption costing operating income variable costing income. This is because units produced were units sold. irs some of costs in the units of ending inventory. These costs will not be until those units are sold. costs to the future January's absorption costing income. costing operating income variable costing operating income. This is because units produced were units sold for the month. 7. as was the case in this February, January's costs that absorption costing assigned to that inventory are expensed in This February's absorption costing income