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	$	30
Direct material		11
Direct labor		4
Variable overhead		6

Budgeted fixed overhead in 20x1, the companys first year of operations, was $640,000. Actual production was 160,000 ten-gallon containers, of which 152,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses.

Fixed	$	160,000		for the year
Variable	$	1		per container sold

Required:

1. 1. Compute the product cost per container of frozen yogurt under (a) variable costing and (b) absorption costing.

2. 2-a. Prepare operating income statements for 20x1 using absorption costing.

3. 2-b. Prepare operating income statements for 20x1 using variable costing.

4. 3. Reconcile the operating income reported under the two methods by listing the two key places where the income statements differ.

5. 4. Reconcile the operating income reported under the two methods using the shortcut method.

Req 1 Req 2A Req 2B Req 3 Req 4 Compute the product cost per container of frozen yogurt under (a) variable costing and (b) absorption costing. Per Unit Product Cost a. Variable costing b. Absorption costing Req 1 Req 2A Req 2B Reg 3 Req 4 Prepare operating income statements for 20x1 using absorption costing SKINNY DIPPERS, INC. Absorption-Costing Operating Income Statement For the Year Ended December 31, 20X1 Selling and Administrative Expenses Req 1 Req 2A Req 2B Req3 Req 4 Prepare operating income statements for 20x1 using variable costing. SKINNY DIPPERS, INC. Variable-Costing Operating Income Statement For the Year Ended December 31, 20X1 Variable expenses: Fixed expenses: Req 1 Req 2A Reg 2B Reg 3 Req 4 Reconcile the operating income reported under the two methods by listing the two key places where the income statements differ. Subtotal Total Difference in operating income Req 1 Reg 2a Reg 2B Reg 3 Req 4 Reconcile the operating income reported under the two methods using the shortcut method. Change in inventory (in units) Predetermined fixed overhead rate Difference in reported operating income units X per unit