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ACC 650 MODULE 7 HOMEWORK 7

ACC 650 MODULE 7 HOMEWORK 7

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8-21Skinny 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 ...................................................................................................... 3Budgeted fixed overhead in 20x1, the company�s first year of operations, was $300,000. Planned andactual 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 yearVariable ............................................................................................ $1 per container sold1. Compute the product cost per container of frozen yogurt under ( a ) variable costing and( b ) absorption costing.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 theincome statements differ.4. Reconcile the income reported under the two methods using the shortcut method.17-20Breakfasttime Cereal Company manufactures two breakfast cereals in a joint process. Cost and quantity information is as follows: Joint Cost Cereal                          Quantity at Split-Off Point            Sales Price per Kilogram$30,000    Yummies ..................... 12,000 kilograms ..................................... $2.00                Crummies .................... 8,000 kilograms ..................................... 2.50 Required: Use the physical-units method to allocate the company’s joint production cost betweenYummies and Crummies. 17-22 Refer to the data given in the preceding exercise.Required: Use the relative-sales-value method to allocate Breakfasttime Cereal Company’s joint productioncost between Yummies and Crummies. Refer to the data given in Exercise 17–20 . Breakfasttime Cereal Company has an opportunity to process its Crummies further into a mulch for ornamental shrubs. The additional processing operation costs $.50 per kilogram, and the mulch will sell for $3.50 per kilogram. Required:1. Should Breakfasttime’s management decide to process Crummies into the mulch? Why?2. Suppose the company does process Crummies into the mulch. Use the net-realizable-value methodto allocate the joint production cost between the mulch and the Yummies


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