Assignment: Skinny Dippers
Skinny Dippers, Inc. produces nonfat frozen yogurt. The product is sold in five-gallon containers, which have the following price and variable costs.
Sales price ................................................................................................................ $15
Direct material ........................................................................................................... 5
Direct labor ................................................................................................................ 2
Variable overhead ...................................................................................................... 3
Budgeted fixed overhead in 20x1, the company's first year of operations, was $300,000. Planned and actual production was 150,000 five-gallon containers, of which 125,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses.
Fixed ................................................................................................ $50,000 for the year
Variable ............................................................................................ $1 per container sold
Required:
1. Compute the product cost per container of frozen yogurt under
a) variable costing and
(b) absorption c osting.
2. Prepare income statements for 20x1 using (a) absorption costing and (b) variable costing.
3. Reconcile the income reported under the two methods by listing the two key places where the income statements differ.
4. Reconcile the income reported under the two methods using the shortcut method.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.