1. Smooth Skin Care Products Inc.
   Estimated Income StatementVariable CostingAloe Vera Hand Lotion
   For the Month Ending November 30
   Sales		$
   Variable cost of goods sold:
   Direct materials	$
   Direct labor
   Variable manufacturing cost
   Fixed cost
   		$
   		$
   Fixed costs:
   	$
   		$

   Feedback

   2. Under variable costing, the cost of goods sold includes only variable manufacturing costs.

   Learning Objective 1 and Learning Objective 2.

   3. What would be the estimated loss in income from operations if the aloe vera hand lotion production were temporarily suspended for November? $

   4. What advice should the controller give to management?

   Production of A.V. lotion should be continued . Temporary suspension of production would result in an operating loss of $1,800,000 compared with an operating loss of $840,000 if production is continued. The result would be a savings of $960,000 .

   Feedback

   3. The estimated loss is calculated by adding the fixed manufacturing cost plus the fixed selling and administrative expenses.

   4. Keep in mind that in the short run, fixed costs cannot be avoided.

   Learning Objective 1 and Learning Objective 2.

   Feedback

   Partially correct