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During Heaton Company's first two years of operations, it reported absorption costing net operating income as Sales (@ $64 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses* Net operating income. Year 1 Year 2 $ 1,024,000 $1,664,000 560,000 464,000 301,000 $ 163,000 *$3 per unit variable; $253,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($294,000+ 21,000 units) Absorption costing unit product cost 910,000 754,000 331,000 $ 423,000 $6 12 3 14 $ 35

During Heaton Company's first two years of operations, it reported absorption costing net operating income as Sales (@ $64 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses* Net operating income. Year 1 Year 2 $ 1,024,000 $1,664,000 560,000 464,000 301,000 $ 163,000 *$3 per unit variable; $253,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($294,000+ 21,000 units) Absorption costing unit product cost 910,000 754,000 331,000 $ 423,000 $6 12 3 14 $ 35

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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Required 1 Required 2 Required 3 Using variable costing, what is the unit product cost for both years? Unit product cost 6 Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.) Net operating income (loss) Year 1 Year 2 Required 1 Required 2 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 Variable costing net operating income (loss) Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income 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 6 Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.) Net operating income (loss) Year 1 Year 2 Required 1 Required 2 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 Variable costing net operating income (loss) Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income Year 2
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 (@ $35 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $253,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Year 1 Year 2 $ 1,024,000 $1,664,000 560,000 464,000 301,000 $ 163,000 Variable manufacturing overhead Fixed manufacturing overhead ($294,000 ÷ 21,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 2 21,000 26,000 Units produced Units sold Year 1 21,000 16,000 910,000 754,000 331,000 $ 423,000 $6 12 3 14 $35 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.
Transcribed Image Text: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 (@ $35 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $253,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Year 1 Year 2 $ 1,024,000 $1,664,000 560,000 464,000 301,000 $ 163,000 Variable manufacturing overhead Fixed manufacturing overhead ($294,000 ÷ 21,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 2 21,000 26,000 Units produced Units sold Year 1 21,000 16,000 910,000 754,000 331,000 $ 423,000 $6 12 3 14 $35 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.
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