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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $61 per unit) Cost of goods sold (@$30 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $254,000 fixed each year. The company's $30 unit product cost is computed as follows: Year 1 $ 1,037,000 510,000 527,000 305,000 $ 222,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($308,000+ 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 Year 2 $ 1,647,000 810,000 837,000 335,000 $ 502,000 $ 6 9 1 14 $ 30 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 (@ $61 per unit) Cost of goods sold (@$30 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $254,000 fixed each year. The company's $30 unit product cost is computed as follows: Year 1 $ 1,037,000 510,000 527,000 305,000 $ 222,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($308,000+ 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 Year 2 $ 1,647,000 810,000 837,000 335,000 $ 502,000 $ 6 9 1 14 $ 30 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 $1,647,000 Sales (@ $61 per unit) Cost of goods sold (@ $30 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $254,000 fixed each year. The company's $30 unit product cost is computed as follows: Year 1 $ 1,037,000 510,000 527,000 305,000 $ 222,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($308,000 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 27,000 810,000 837,000 335,000 $ 502,000 $ 6 9 1 14 $ 30 Required: 1. Using variable costing, what is the unit odu 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.
Transcribed Image Text:During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 $1,647,000 Sales (@ $61 per unit) Cost of goods sold (@ $30 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $254,000 fixed each year. The company's $30 unit product cost is computed as follows: Year 1 $ 1,037,000 510,000 527,000 305,000 $ 222,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($308,000 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 27,000 810,000 837,000 335,000 $ 502,000 $ 6 9 1 14 $ 30 Required: 1. Using variable costing, what is the unit odu 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.
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