During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $62 per unit) $ 1,178,000 $1,798, 000 Cost of goods sold (@ $36 per unit) 684,000 1,044,000 Gross margin 494,000 754,000 Selling and administrative expenses * 305,000 335,000 Net operating income $ 189,000 $ 419,000 * $3 per unit variable; $248,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials $ 9 Direct labor 10 Variable manufacturing overhead 4 Fixed manufacturing overhead ($312,000 - 24,000 units) 13 Absorption costing unit product cost $ 36 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 24,000 24,000 Units sold 19,000 29,000 Required: Using variable costing, what is the unit product cost for both years? What is the variable costing net operating income in Year 1 and in Year 2? 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: Year 1 Year 2 Sales (@ $62 per unit) $ 1,178,000 $1,798, 000 Cost of goods sold (@ $36 per unit) 684,000 1,044,000 Gross margin 494,000 754,000 Selling and administrative expenses * 305,000 335,000 Net operating income $ 189,000 $ 419,000 * $3 per unit variable; $248,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials $ 9 Direct labor 10 Variable manufacturing overhead 4 Fixed manufacturing overhead ($312,000 - 24,000 units) 13 Absorption costing unit product cost $ 36 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 24,000 24,000 Units sold 19,000 29,000 Required: Using variable costing, what is the unit product cost for both years? What is the variable costing net operating income in Year 1 and in Year 2? Reconcile the absorption costing and the variable costing net operating income figures for each year

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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