S Skinny Dippers Incorporated produces nonfat frozen yogurt. The product is sold to frozen yogurt shops in five-gallon containers, which have the following price and variable costs. Sales price Direct material Direct labor Variable overhead $ 50 18 12 12 Budgeted fixed overhead in 20x1, the company's first year of operations, was $270,000. Actual production was 90,000 five-gallon containers, of which 81,000 were sold. Skinny Dippers Incorporated incurred the following selling and administrative expenses. Fixed Variable $ 90,000 for the year $2 per container sold Required: 1. Compute the product cost per container of frozen yogurt under (a) variable costing and (b) absorption costing. 2-a. Prepare an operating income statement for 20x1 using absorption costing. 2-b. Prepare an operating income statement for 20x1 using variable costing. 3. Reconcile the operating income reported under the two methods by listing the two key places where the income statements differ. 4. Reconcile the operating income reported under the two methods using the shortcut method.

Skinny Dippers Incorporated produces nonfat frozen yogurt. The product is sold to frozen yogurt shops in five-galion containers, which have the following price and variable costs. Budgeted fixed overhead in 201, the company's first year of operations, was $270,000. Actual production was 90,000 five-gallon containers, of which 81,000 were sold. Skinny Dippers Incorporated incurred the following selling and administrative expenses. Required: 1. Compute the product cost per container of frozen yogurt under (a) variable costing and (b) absorption costing. 2-a. Prepare an operating income statement for 201 using absorption costing. 2-b. Prepare an operating income statement for 201 using variable costing. 3. Reconcile the operating income reported under the two methods by listing the two key places where the income statements differ. 4. Reconclle the operating income reported under the two methods using the shortcut method