During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 $ 1,890,000 1,080,000 810,000 343,000 $ 467,000 Sales (@ $63 per unit) Cost of goods sold (@ $36 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $253,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($350,000 25,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Required 1 Year 1 $ 1,260,000 720,000 540,000 313,000 $ 227,000 Year 1 25,000 20,000 Required 2 Unit product poot Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net operating income in Year 1 and in Year 2? 3. Reconcile the absorption costing and the variable costing net operating income figures for each year. Year 2 25,000 30,000 Complete this question by entering your answers in the tabs below. Required 3 $8 9 5 Using variable costing, what is the unit product cost for both years? 14 $36
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 $ 1,890,000 1,080,000 810,000 343,000 $ 467,000 Sales (@ $63 per unit) Cost of goods sold (@ $36 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $253,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($350,000 25,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Required 1 Year 1 $ 1,260,000 720,000 540,000 313,000 $ 227,000 Year 1 25,000 20,000 Required 2 Unit product poot Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net operating income in Year 1 and in Year 2? 3. Reconcile the absorption costing and the variable costing net operating income figures for each year. Year 2 25,000 30,000 Complete this question by entering your answers in the tabs below. Required 3 $8 9 5 Using variable costing, what is the unit product cost for both years? 14 $36
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows:
Year 2
$ 1,890,000
1,080,000
810,000
343,000
$ 467,000
Sales (@ $63 per unit)
Cost of goods sold (@ $36 per unit)
Gross margin
Selling and administrative expenses*
Net operating income
*$3 per unit variable; $253,000 fixed each year.
The company's $36 unit product cost is computed as follows:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead ($350,000 ÷ 25,000 units)
Absorption costing unit product cost
Production and cost data for the first two years of operations are:
Units produced
Units sold
Year 1
$ 1,260,000
720,000
540,000
313,000
$ 227,000
Year 1
25,000
20,000
Required 1
Required 2
Required:
1. Using variable costing, what is the unit product cost for both years?
2. What is the variable costing net operating income in Year 1 and in Year 2?
3. Reconcile the absorption costing and the variable costing net operating income figures for each year.
Year 2
25,000
30,000
Complete this question by entering your answers in the tabs below.
Required 3
$ 8
9
5
14
$36
Using variable costing, what is the unit product cost for both years?
Unit product cost
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