Skinny Dippers, Inc Absorption versus Variable Costing Chapter 8 (Textbook): (LO 8-2,8-3,8-4) Skinny Dippers, Inc. produces nonfat frozen yogurt. The product is sold in ten-gallon containers, which have the following price and variable costs. Sales price Direct material Direct labor Variable overhead $54 20 13 12 Budgeted fixed overhead in 20x1, the company's first year of operations, was $700,000. Actual production was 140,000 ten-gallon containers, of which 133,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses Fixed Variable $140,000 for the year 1 per container sold Required 1. Compute the product cost per container of frozen yogurt under (a) variable costing and (b) absorption costing. 2. Prepare operating income statements for 20x1 using (a) absorption costing and (b) 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. Absorption vs. Variable Costing 1. Actual production and budgeted production were the same Predetermined fixed overhead rate (per unit) Standard Cost per unit Standard cost per unit under variable costing Fixed overhead per unit under absorption costing Standard cost per unit under absorption costing 2.a SKINNY DIPPERS, INC ABSORPTION-COSTING OPERATING INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20X1 Sales Revenue of (S per unit Variable at (S) per unit Operating Income SKINNY DIPPERS, INC VARIABLE-COSTING OPERATING INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 20X1 Sales Revenue 133,000 units sold at $54 per unit of $45 per unit at $1 per unit Less: Contribution Margin Fixed Manufacturing Overhead Cost of goods sold under absorption costing Subtotal Less: Fixed Manufacturing overhead as period expense under variable costing Operating Income under variable costing Difference in operating income Difference in reported operating income (complete the statement) (complete the statement) = Change in: As shown in requirement (2), reported operating income is lower under variable costing Week 6 Assignment - Excel Build A Spreadsheet Using the Excel spreadsheet template provided, build a spreadsheet by preparing the following statements for: Countywide Cable Services Segmented Income Statement; TV Cable Company Chapter 12 (Textbook): LO 12-5) Countywide Cable Services, Inc. is organized with three segments: Metro, Suburban, and Outlying. Data for these segments for the year just ended follow Service revenue Variable expenses Controllable fixed expenses Fixed expenses controllable by others Metro Suburban Outlying $1,100,000 $900,000 $500,000 80,000 395,000 315,000 145,000 210,000 180,000 70,000 180,000 130,000 In addition to the expenses listed above, the company has $120,000 of common fixed expenses. Income-tax expense for the year is $320,000. Required: 1. Prepare a segmented income statement for Countywide Cable Services, Inc Segmented income statement using the contribution format: Countrywide Cable Services Item Metro Suburban Outlying 4 Less: ess: Fixed expenses, traceable to segment but controllable by others 10
