YoYum Ltd produces frozen yoghurt, a low-fat dairy dessert. The product is sold in five-litre containers and had the following price and variable costs per unit for the current year that ended on 30 June: Sales price $ 19.00 Direct material 6.00 Direct labour 3.00 Variable overhead 4.00 Budgeted fixed overhead for the current year was $400 000, which was equal to actual fixed overhead. Actual production was 200 000 five-litre containers, which was equal to the budgeted level of production, but only 190 000 containers were sold. YoYum incurred the following selling and administrative expenses: Fixed $70 000 Variable $2 per container sold 

Required: 

1. Calculate the cost per unit under variable and absorption costing. 

2. Prepare income statements for the current year using: 1. (a)absorption costing 2. (b)variable costing. 

3. Reconcile the profit reported under the two methods by listing the two key areas where the income statements differ. 

4. Reconcile the profit reported under the two methods using the short-cut method. 

5. Construct an Excel spreadsheet to solve all of the preceding requirements. Show how the solution will change if the following information changes: the selling price and the direct material cost per unit are $20.00 and $6.50, respectively.