Skinny Dippers, Inc. produces nonfat frozen yogurt. The product is sold in ten-gallon containers, which have the following price andvariable costs.Sales priceDirect material$3011Direct laborVariable overhead4Budgeted fixed overhead in 20x1, the company's first year of operations, was $640,000. Actual production was 160,000 ten-galloncontainers, of which 152,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses.$160,000 for the year$4FixedVariable1 per container soldRequired: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.

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Description: Skinny Dippers, Inc. produces nonfat frozen yogurt. The product is sold in ten-gallon containers, which have the following price andvariable costs.Sales priceDirect material$3011Direct laborVariable overhead4Budgeted fixed overhead in 20x1, the comp

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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 Direct material Direct labor Variable overhead $30 11 4 6. Budgeted fixed overhead in 20x1, the company's first year of operations, was $640,00O. Actual production was 160,000 ten-gallon containers, of which 152,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses. Fixed Variable $160,000 for the year 2$ 1 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.

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 Direct material Direct labor Variable overhead $30 11 4 6. Budgeted fixed overhead in 20x1, the company's first year of operations, was $640,00O. Actual production was 160,000 ten-gallon containers, of which 152,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses. Fixed Variable $160,000 for the year 2$ 1 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

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
Direct material
$30
11
Direct labor
Variable overhead
4
Budgeted fixed overhead in 20x1, the company's first year of operations, was $640,000. Actual production was 160,000 ten-gallon
containers, of which 152,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses.
$160,000 for the year
$4
Fixed
Variable
1 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.

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