During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: 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 ($418,000 ÷ 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Year 1 22,000 17,000 Year 2 22,000 27,000 inam $5 9 3 19 $36 Year 1 $ 1,071,000 612,000 459,000 304,000 $ 155,000 Year 2 $ 1,701,000 972,000 729,000 334,000 $ 395,000 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.
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: 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 ($418,000 ÷ 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Year 1 22,000 17,000 Year 2 22,000 27,000 inam $5 9 3 19 $36 Year 1 $ 1,071,000 612,000 459,000 304,000 $ 155,000 Year 2 $ 1,701,000 972,000 729,000 334,000 $ 395,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Required 1 Required 2 Required 3
What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus
sign.)
Net operating income (loss)
Required 1 Required 2 Required 3
ear 1
Year 2
< Required 1
Reconcile the absorption costing and the variable costing net operating income figures for each year.
Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
Variable costing net operating income (loss)
Add (deduct) fixed manufacturing overhead deferred in (released from) inventory
Absorption costing net operating income
Required 3 >
< Required 2
Required 3 >
Year 1
Year 2
![Problem 7-19 (Algo) Variable Costing Income Statement; Reconciliation [LO,7-1, LO7-2, L07-3]
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows:
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 ($418,000 ÷ 22,000 units)
Absorption costing unit product cost
Production and cost data for the first two years of operations are:
Units produced
Units sold
Year 1
22,000
17,000
Year 2
22,000
27,000
Required:
1. Using variable costing, what is the unit product cost for both years?
$5
9
3
Complete this question by entering your answers in the tabs below.
19
$36
Year 1
$ 1,071,000
612,000
459,000
304,000
$ 155,000
Year 2
$ 1,701,000
972,000
729,000
334,000
$ 395,000
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fee124333-d847-425e-be04-fc96a865d87e%2F19cb395e-d37e-4bb9-b06e-9d5afcd6de61%2Fe3kd1na_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 7-19 (Algo) Variable Costing Income Statement; Reconciliation [LO,7-1, LO7-2, L07-3]
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows:
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 ($418,000 ÷ 22,000 units)
Absorption costing unit product cost
Production and cost data for the first two years of operations are:
Units produced
Units sold
Year 1
22,000
17,000
Year 2
22,000
27,000
Required:
1. Using variable costing, what is the unit product cost for both years?
$5
9
3
Complete this question by entering your answers in the tabs below.
19
$36
Year 1
$ 1,071,000
612,000
459,000
304,000
$ 155,000
Year 2
$ 1,701,000
972,000
729,000
334,000
$ 395,000
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.
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