Question

In: Accounting

Skinny Dippers, Inc. produces nonfat frozen yogurt. The product is sold in ten-gallon containers, which have...

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 $ 30
Direct material 11
Direct labor 4
Variable overhead 6

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.

Fixed $ 160,000 for the year
Variable $ 1 per container sold

Required:

  1. 1. Compute the product cost per container of frozen yogurt under (a) variable costing and (b) absorption costing.

  2. 2-a. Prepare operating income statements for 20x1 using absorption costing.

  3. 2-b. Prepare operating income statements for 20x1 using variable costing.

  4. 3. Reconcile the operating income reported under the two methods by listing the two key places where the income statements differ.

  5. 4. Reconcile the operating income reported under the two methods using the shortcut method.

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Skinny Dippers, Inc. produces nonfat frozen yogurt. The product is sold in ten-gallon containers, which have...
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 $ 56 Direct material 20 Direct labor 12 Variable overhead 15 Budgeted fixed overhead in 20x1, the company’s first year of operations, was $330,000. Actual production was 110,000 ten-gallon containers, of which 99,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses. Fixed $ 110,000 for the year Variable $ 4 per container...
C4) Skinny Dippers, Inc. produces nonfat frozen yogurt. The product is sold in ten-gallon containers, which...
C4) 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 $ 40 Direct material 14 Direct labor 6 Variable overhead 9 Budgeted fixed overhead in 20x1, the company’s first year of operations, was $340,000. Actual production was 170,000 ten-gallon containers, of which 160,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses. Fixed $ 510,000 for the year Variable $ 1 per...
Hefty Inc. produces plastic storage containers. The company makes two sizes of containers: regular (55 gallon)...
Hefty Inc. produces plastic storage containers. The company makes two sizes of containers: regular (55 gallon) and large (100 gallon). The company uses the same machinery to produce both sizes. The machinery can be run for only 2,500 hours per month. Hefty can produce 20 regular containers every hour, whereas it can only produce 8 large containers in the same amount of time. Fixed costs amount to $1,000,000 per month. Sales prices, variable costs, and monthly demand are as follows:...
Richins Company produces cranberry juice sold in half-gallon containers. Richins uses a standard costing system and...
Richins Company produces cranberry juice sold in half-gallon containers. Richins uses a standard costing system and has set the following standards for materials and labor for the juice production: Direct materials (64 oz. @ $0.03) $1.92 Direct Labor (0.05 hr. @ $12.00) 0.60 Total prime cost $2.52 During January, Richins experienced the following actual results: a. Units produced: 30,000 half gallons. b. Ounces of materials purchased and used: 2,300,000 ounces at $0.025 per ounce. c. Labor used: 1,525 hours at...
Patrick Inc. makes industrial solvents sold in 5-gallon drum containers. Planned production in units for the...
Patrick Inc. makes industrial solvents sold in 5-gallon drum containers. Planned production in units for the first 3 months of the coming year is: January 40,000 February 50,000 March 65,000 Each drum requires 6 gallons of chemicals and one plastic drum container. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met for the ending inventory of December in the prior year. The cost of one...
Calculate the EBDAT breakeven point for 2020 in terms of survival revenues for Jen and Larry’s Frozen Yogurt Company. How many cups of frozen yogurt would have to be sold to reach EBDAT breakeven?
Jen and Larry’s Frozen Yogurt Company     In 2019, Jennifer (Jen) Liu and Larry Mestas founded Jean and Larry’s Frozen Yogurt Company, which was based on the idea of applying the microbrew or microbatch strategy to the production and sale of frozen yogurt. Jen and Larry began producing small quantities of unique flavors and blends in limited editions. Revenues were $600,000 in 2019 and were estimated to be $1.2 million in 2020.     Because Jen and Larry were selling premium frozen yogurt...
Cornerstone Exercise 2.3 (Algorithmic) Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For...
Cornerstone Exercise 2.3 (Algorithmic) Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 47,700 units will be produced, with the following total costs: Direct materials ? Direct labor 69,000 Variable overhead 22,000 Fixed overhead 205,000 Next year, Pietro expects to purchase $119,500 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows: Direct materials Inventory Work-in-Process Inventory Beginning $7,000 $13,600 Ending $6,900 $15,600 Pietro...
Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts...
Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 49,100 units will be produced, with the following total costs: Direct materials ? Direct labor 53,000 Variable overhead 25,000 Fixed overhead 185,000 Next year, Pietro expects to purchase $128,000 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows: Direct materials Inventory Work-in-Process Inventory Beginning $6,000 $14,000 Ending $5,900 $16,000 Pietro expects to produce 49,100...
Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts...
Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 49,100 units will be produced, with the following total costs: Direct materials ? Direct labor 53,000 Variable overhead 25,000 Fixed overhead 185,000 Next year, Pietro expects to purchase $128,000 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows: Direct materials Inventory Work-in-Process Inventory Beginning $6,000 $14,000 Ending $5,900 $16,000 Pietro expects to produce 49,100...
Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts...
Cost of Goods Sold Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 54,200 units will be produced, with the following total costs: Direct materials ? Direct labor 71,000 Variable overhead 24,000 Fixed overhead 245,000 Next year, Pietro expects to purchase $116,000 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows: Direct materials Inventory Work-in-Process Inventory Beginning $7,000 $11,900 Ending $6,900 $13,900 Pietro expects to produce 54,200...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT