Over the past three years, Ice Scream has expanded its product offerings from basic chocolate and vanilla flavors to include many varieties of certified organic ice cream flavors. Ben Jerrie, founder of the business, realizes that future financial success depends on cost control as well as revenue generation. He is considering expansion of the company's product line to include yogurt smoothies.

1. Would Activity-Based, Departmental, or Plantwide Costing be most appropriate?

2. How should the company handle operating expenses for the two product lines (Be sure to know exactly what expenses are part of operating expenses before answering)?

3. When it comes time for the company to report the financial results for the year, should the data for the two products be merged into one income statement or should separate income statements be prepared showing profit (loss)? Please explain your choice.