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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 $ 1,071,000 595,000 476,000 304,000 $ 172,000 Year 2 Sales (@ $63 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses* $ 1,701,000 945,000 756,000 334,000 Net operating income $ 422,000 * $3 per unit variable; $253,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials $ 7 Direct labor 11 Variable manufacturing overhead Fixed manufactùring overhead ($308,000 ÷ 22,000 units) 14 Absorption costing unit product cost $ 35 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced Units sold 22,000 17,000 22,000 27,000

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 $ 1,071,000 595,000 476,000 304,000 $ 172,000 Year 2 Sales (@ $63 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses* $ 1,701,000 945,000 756,000 334,000 Net operating income $ 422,000 * $3 per unit variable; $253,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials $ 7 Direct labor 11 Variable manufacturing overhead Fixed manufactùring overhead ($308,000 ÷ 22,000 units) 14 Absorption costing unit product cost $ 35 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced Units sold 22,000 17,000 22,000 27,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 $ 1,071,000 Sales (@ $63 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses* 595,000 476,000 304,000 $ 172,000 Year 2 $ 1,701,000 945,000 756,000 334,000 Net operating income $ 422,000 * $3 per unit variable; $253,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials $ 7 Direct labor 11 Variable mặnufacturing overhead Fixed manufactùring overhead ($308,000 ÷ 22,000 units) 3 14 Absorption costing unit product cost $ 35 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 22,000 17,000 22,000 27,000 Units sold
Transcribed Image Text:During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 $ 1,071,000 Sales (@ $63 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses* 595,000 476,000 304,000 $ 172,000 Year 2 $ 1,701,000 945,000 756,000 334,000 Net operating income $ 422,000 * $3 per unit variable; $253,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials $ 7 Direct labor 11 Variable mặnufacturing overhead Fixed manufactùring overhead ($308,000 ÷ 22,000 units) 3 14 Absorption costing unit product cost $ 35 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 22,000 17,000 22,000 27,000 Units sold
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. es Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using variable costing, what is the unit product cost for both years? Unit product cost
Transcribed Image Text: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. es Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using variable costing, what is the unit product cost for both years? Unit product cost
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