Skinny Dippers Inc. produces nonfat frozen yogurt. The product is sold in ten$-$gallon containers, which have the following price and

varlable costs.

Budgeted fixed overhead in $20$x$1,$ the company's first year of operations, was $$640,000.$ Actual production was $160,000$ ten$-$gallon

contalners, of which $152,000$ were sold. Skinny Dippers Inc. Incurred the following selling and administrative expenses.

Required:

Compute the product cost per container of frozen yogurt under $($a$)$ varlable 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 varlable costing.

Reconclle the operating income reported under the two methods by listing the two key places where the income statements differ.

Reconcile the operating Income reported under the two methods using the shortcut method.