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Skinny Dippers, Inc., produces nonfat frozen yogurt which it sells to restaurants and ice cream shops. The product is sold in 10-gallon containers, which have
Skinny Dippers, Inc., produces nonfat frozen yogurt which it sells to restaurants and ice cream shops. The product is sold in 10-gallon containers, which have the following price and variable costs. Sales price Direct material Direct labor Variable overhead $43 17 10 Budgeted fixed overhead in 20x4, the company's first year of operations, was $390,000. Actual production was 130,000 10-gallon containers, of which 123,500 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses. Fixed Variable $130,000 for the year $ 1 per container sold Required 1. Compute the per unit product cost per container of frozen yogurt under variable costing and absorption costing Per unit oduct cost Variable costing Absorption costing 2. Prepare operating income statements for the year 20x4 using: a. Absorption costing. SKINNY DIPPERS, INC Absorption-Costing Operating Income Statement For the Year Ended December 31, 20X4 Selling and Administrative Expenses b. Variable costing. SKINNY DIPPERS, INC Variable-Costing Operating Income Statement For the Year Ended December 31, 20x4 Variable expenses Fixed expenses: 3. Reconcile the operating income reported under the two methods by listing the two key places where the income statements differ. Subtotal Total $ 221,000 240,500 S 19,500) Difference in operating income 4. Reconcile the operating income reported under the two methods using the shortcut method. Change in inventory (in units)PredeterminedDifference in reported operating income fixed overhead rate units per unit
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