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	$	53
Direct material		18
Direct labor		13
Variable overhead		13

Budgeted fixed overhead in 20x1, the companys first year of operations, was $280,000. Actual production was 140,000 ten-gallon containers, of which 126,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses.

Fixed	$	140,000		for the year
Variable	$	4		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.

Skinny Dippers, Inc. produces nonfat frozen yogurt. The product is sold in ten-gallon containers, which have the following price and variable costs. $53 18 Sales price Direct material Direct labor Variable overhead 13 13 Budgeted fixed overhead in 20x1, the company's first year of operations, was $280,000. Actual production was 140,000 ten-gallon containers, of which 126,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses. Fixed Variable $140,000 for the year $ 4 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 operating income statements for 20x1 using absorption costing. 2-b. Prepare operating income statements 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. Req 1 Req 2A Req 2B Req3 Req 4 Compute the product cost per container of frozen yogurt under (a) variable costing and (b) absorption costing. a. Variable costing b. Absorption costing Per Unit Product Cost $ 44 $ 46 Req 1 Req 2A Req 2B Req 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 Sales revenue $ 6,678,000 Less: Cost of goods sold 5,796,000 Gross margin $ 882,000 Selling and Administrative Expenses Fixed selling and administrative 140,000 Variable selling and administrative 504,000 Operating income $ 238,000 Prepare operating income statements for 20x1 using variable costing. SKINNY DIPPERS, INC. Variable-Costing Operating Income Statement For the Year Ended December 31, 20X1 Fixed manufacturing overhead Variable expenses: Fixed expenses: Req 1 Req 2A Req 2B Req3 Req 4 Reconcile the operating income reported under the two methods using the shortcut method. Change in inventory (in units) units Predetermined | fixed overhead rate * per unit - Difference in reported operating income