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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follo Sales (@$60 per unit) Cost of goods sold (@ $30 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 Year 2 $ 1,080,000 $1,680,000 540,000 540,000 301,000 $ 239,000 *$3 per unit variable; $247,000 fixed each year. The company's $30 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($253,000+ 23,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 22 000 Year 2 23.000 840,000 840,000 331,000 $509,000 $7 10 2 11 $ 30

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follo Sales (@$60 per unit) Cost of goods sold (@ $30 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 Year 2 $ 1,080,000 $1,680,000 540,000 540,000 301,000 $ 239,000 *$3 per unit variable; $247,000 fixed each year. The company's $30 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($253,000+ 23,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 22 000 Year 2 23.000 840,000 840,000 331,000 $509,000 $7 10 2 11 $ 30

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 2 $1,680,000 Sales (@$60 per unit) Cost of goods sold (@ $30 per unit) Gross margin Selling and administrative expenses Net operating income. *$3 per unit variable: $247,000 fixed each year. The company's $30 unit product cost is computed as follows: Year 1 $ 1,080,000 540,000 540,000 301,000 $ 239,000 Direct materials: Direct labor Variable manufacturing overheadi Fixed manufacturing overhead ($253,000+ 23,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 21 23,000 28,000 Units produced Units sold Year 1 23,000 18,000 840,000 840,000 331,000 $ 509,000 $7 10 2 11 $ 30
Transcribed Image Text:During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 $1,680,000 Sales (@$60 per unit) Cost of goods sold (@ $30 per unit) Gross margin Selling and administrative expenses Net operating income. *$3 per unit variable: $247,000 fixed each year. The company's $30 unit product cost is computed as follows: Year 1 $ 1,080,000 540,000 540,000 301,000 $ 239,000 Direct materials: Direct labor Variable manufacturing overheadi Fixed manufacturing overhead ($253,000+ 23,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 21 23,000 28,000 Units produced Units sold Year 1 23,000 18,000 840,000 840,000 331,000 $ 509,000 $7 10 2 11 $ 30
Required 1 Required 2 Required 3 Using variable costing, what is the unit product cost for both years? Unit product cost Required 1 Requited 2 What is the variable costing net operating income in Year 1 and in Year 27 (Loss amounts should be indicated with a minus sign.) Net operating income (loss) Required 1 Required 2 Required 31 Year 1 Year 2 <Required 1 Required 3> Required 3 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 Year 1 Required 2 Variable costing net operating income (foss) Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income < Required 2 Year 2
Transcribed Image Text:Required 1 Required 2 Required 3 Using variable costing, what is the unit product cost for both years? Unit product cost Required 1 Requited 2 What is the variable costing net operating income in Year 1 and in Year 27 (Loss amounts should be indicated with a minus sign.) Net operating income (loss) Required 1 Required 2 Required 31 Year 1 Year 2 <Required 1 Required 3> Required 3 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 Year 1 Required 2 Variable costing net operating income (foss) Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income < Required 2 Year 2
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