During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $64 per unit) Cost of goods sold (@ $36 per unit) Gross margin Selling and administrative expenses* Net operating income $3 per unit variable; $248,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($345,000 ÷ 23,000 units) Absorption costing unit product cost $ 9 10 2 15 $ 36 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced Units sold 23,000 23,000 18,000 28,000 Required: Year 1 $ 1,152,000 648,000 Year 2 $ 1,792,000 1,008,000 504,000 302,000 $ 202,000 784,000 332,000 $ 452,000 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. Complete this question by entering your answers in the tabs below.

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $64 per unit) Cost of goods sold (@ $36 per unit) Gross margin Selling and administrative expenses* Net operating income $3 per unit variable; $248,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($345,000 ÷ 23,000 units) Absorption costing unit product cost $ 9 10 2 15 $ 36 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced Units sold 23,000 23,000 18,000 28,000 Required: Year 1 $ 1,152,000 648,000 Year 2 $ 1,792,000 1,008,000 504,000 302,000 $ 202,000 784,000 332,000 $ 452,000 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. Complete this question by entering your answers in the tabs below.

Name: During Heaton Company's first two years of operations, it reported ab
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Description: During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows:Sales (@ $64 per unit)Cost of goods sold (@ $36 per unit)Gross marginYear 1$ 1,152,000648,000504,000302,000$ 202,000Year 2$ 1,792,0

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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