Help determine the steps to solve for #2. (Managerial Accounting by Hilton, 9th Ed Chapter 8 Problem 21) Skinny Dippers, Inc. produces nonfat frozen yogurt. The product is sold in five-gallon containers, which have the following price and variable costs. Sales Price $15.00 per 5 Gallon Container Direct Material $5.00 per 5 Gallon Container Direct Labor $2.00 per 5 Gallon Container Variable Overhead $3.00 per 5 Gallon Container Budgeted fixed overhead in 20x1, the companys first year of operations, was $300,000. Planned and actual production was 150,000 five-gallon containers, of which 125,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses. Budgeted Fixed Manufacturing Overhead $300,000 per year Budgeted production 150,000 5 Gallon Containers Actual production 150,000 5 Gallon Containers Unit Sales 125,000 5 Gallon Containers Fixed Selling and administrative costs $50,000 per year Variable Selling and Administrative costs $1.00 per 5 Gallon Container Required: 1. Compute the product cost per container of frozen yogurt under ( a ) variable costing Direct Material $5.00 Add: Direct Labor $2.00 Add: Variable Overhead $3.00 Variable Cost per unit $10.00 ( b ) absorption costing Direct Material $5.00 Add: Direct Labor $2.00 Add: Variable Overhead $3.00 Add: Applied Fixed Manufacturing Overhead/Unit $2.00 $12.00 2. Prepare income statements for 20x1 using ( a ) variable costing Sales $1,875,000 Less: Cost of Goods Sold $1,250,000 Less: Variable S&A Expense Margin $625,000 Less: Fixed Manufacturing Overhead $300,000 Less: Fixed S&A Expense Income before Taxes $325,000 ( b ) absorption costing Sales $1,875,000 Less: Cost of Goods Sold $1,500,000 Margin $375,000 Less: Variable S&A Expense $125,000 Less: Fixed S&A Expense $50,000 Income before Taxes $200,000 3. Reconcile the income reported under the two methods by listing the two key places where the income statements differ. COGS variable $1,250,000 Add: Fixed Manufacturing Overhead $300,000 Less: COGS absorption $1,500,000 Difference $50,000 Net Income absorption Less: Net Income variable Difference $- 4. Reconcile the income reported under the two methods using the shortcut method. Production (Units) 150,000 Less: Sales (Units) 125,000 Difference into Inventory (Units) 25,000 Applied Fixed Manufacturing Overhead/Unit $2.00 Checksum $50,000