Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 8, Problem 32P
Skinny Dippers, Inc. produces nonfat frozen yogurt. The product is sold in five-gallon containers, which have the following price and variable costs.
Budgeted fixed
Required:
- 1. Compute the product cost per container of frozen yogurt under (a) variable costing and (b) absorption costing.
- 2. Prepare operating income statements for 20x1 using (a) absorption costing and (b) 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.
- 5. Build a spreadsheet: 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 direct-material cost per unit are $16.00 and $4.50, respectively.
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Students have asked these similar questions
CABADBARAN CORP., produces non-fat yogurt which it sells to restaurants and ice cream shops. The
product is sold in 10-gallon containers, which have the following price and variable costs.
Sales price
Direct materials
Direct labor
Variable overhead
Budgeted fixed overhead in 2019, the company's first year of operations, was P600,000. Actual
production was 150,000 10-gallon containers, of which 125,000 were sold. CABADBARAN incurred the
following selling and administrative expenses.
Fixed
Variable
REQUIREMENTS:
(a) Compute the unit product cost per container of frozen yogurt under variable costing and
absorption costing, respectively.
(b)
2.
P30
10
4
P100,000 for the year
P2 per container sold
Prepare the operating income statements for 2019 using absorption costing and variable costing.
Reconcile the operating income reported under the two methods.
(c)
(d)
Compute the throughput margin and income under throughput costing.
Chandler Packaged Treats (CPT) sells a specialty pet food to pet stores. CPT management prides itself on its scientific management
methods. Applying those methods, the controller estimates the following monthly costs based on 10,000 units (produced and sold):
Direct material
Direct labor
Manufacturing overhead
Selling, general, and administrative
Total
Required:
a. Compute CPT's unit selling price that will yield a profit of $200,000, given sales of 10,000 units.
b. What dollar sales does CPT need to achieve to generate a 15 percent profit on sales, assuming variable costs per unit are 55
percent of the selling price per unit and fixed costs are $188,100.
c. Management believes that a selling price of $100.00 per unit is reasonable given current market conditions. How many units must
CPT sell to generate the revenues (dollar sales) determined in requirement (b)?
Total Annual Costs
(10,000 units)
$ 128,000
60,000
132,000
100,000
$ 420,000
Complete this question by entering your answers…
Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a
proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with
production of 20,000 oat bars currently:
Direct material
Direct labor
Manufacturing overhead
Total
The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs.
PLEASE NOTE: Costs per unit are rounded to two decimal places and shown with "$" and commas as needed (i.e. $1,234.56). All
other dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).
1. What is Oat Treats' relevant cost?
$14,000
6,000
8,000
$28,000
2. What does Simmons Cereal's offer cost?
3. If Oat Treats accepts the offer, what will the effect on profit be?
o Incremental dollar amount =
o Increase or Decrease?
no quotes.
Please note: Your answer is either "Increase" or…
Chapter 8 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 8 - Briefly explain the difference between absorption...Ch. 8 - Timing is the key in distinguishing between...Ch. 8 - The term direct costing is a misnomer. Variable...Ch. 8 - When inventory increases, will absorption-costing...Ch. 8 - Why do many managers prefer variable costing over...Ch. 8 - Explain why some management accountants believe...Ch. 8 - Prob. 7RQCh. 8 - Why do proponents of absorption costing argue that...Ch. 8 - Why do proponents of variable costing prefer...Ch. 8 - Which is more consistent with cost-volume-profit...
Ch. 8 - Explain how the accounting definition of an asset...Ch. 8 - List and define four types of product quality...Ch. 8 - Explain the difference between observable and...Ch. 8 - Prob. 14RQCh. 8 - What is meant by a products grade, as a...Ch. 8 - Prob. 16RQCh. 8 - Prob. 17RQCh. 8 - Explain three strategies of environmental cost...Ch. 8 - Prob. 19RQCh. 8 - Manta Ray Company manufactures diving masks with a...Ch. 8 - Information taken from Tuscarora Paper Companys...Ch. 8 - Easton Pump Companys planned production for the...Ch. 8 - Pandora Pillow Companys planned production for the...Ch. 8 - Bianca Bicycle Company manufactures mountain bikes...Ch. 8 - Refer to the data given in the preceding exercise...Ch. 8 - Prob. 26ECh. 8 - Prob. 27ECh. 8 - The following costs were incurred by Osaka Metals...Ch. 8 - San Mateo Circuitry manufactures electrical...Ch. 8 - Prob. 31ECh. 8 - Skinny Dippers, Inc. produces nonfat frozen...Ch. 8 - Yellowstone Company began operations on January 1...Ch. 8 - Outback Corporation manufactures tactical LED...Ch. 8 - Great Outdoze Company manufactures sleeping bags,...Ch. 8 - Dayton Lighting Company had operating income for...Ch. 8 - Prob. 37PCh. 8 - Chataqua Can Company manufactures metal cans used...Ch. 8 - Advanced Technologies (AT) produces two...Ch. 8 - Laser News Technology, Inc. manufactures...Ch. 8 - Prob. 42CCh. 8 - Refer to the information given in the preceding...Ch. 8 - Prob. 44C
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