During Heaton Company's first two years of operations, it reported absorption costing net operating income as follws:Year 2Sales (e $64 per unit)Cost of goods sold (e $37 per unit)Gross marginSelling and administrative expensesYear 1$ 1,152, 000 $ 1,792, 000666, 000486, 000301, 000$ 185, 0001,836, 000756, 000331, 000$ 425, 000Net operating incone•$3 per unit varlable, $247,000 fixed each year.The company's $37 unit product cost is computed as follows:Direct materialsDirect laborVariable manufacturing overheadFixed manufactüring overhead ($391, 00e + 23, 000 units)$ 6104.17$ 37Absorption costing unit product costProduction and cost data for the first two years of operations are:Units producedUnits soldYear 123, 00018, 000Year 223, 00028, 000Required: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

Answered: Image /qna-images/answer/e891f36e-23b9-41b1-901e-8277130f3d94.jpg

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 $1,152, 000 S 1, 792, 000 666, 000 486, 000 301, 000 $ 185, 000 Year 2 Sales (e $64 per unit) Cost of goods sald (e $37 per unit) Gross margin Selling and administrative expenses 1, 636, 000 756, 000 331, 000 Net operating incoe $ 425, 000 * $3 per unit variable, $247,000 fixed each year The company's $37 unit product cost is computed as follows: Direct materials $ 6 10 Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($391, 00e+ 23, 000 units) 4. 17 $ 37 Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 23, 000 18, 000 Year 2 Units produced Units sold 23, 000 28, 000 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 27 3. Reconcile the absorption costing and the variable costing net operating income figures for each yeat

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 $1,152, 000 S 1, 792, 000 666, 000 486, 000 301, 000 $ 185, 000 Year 2 Sales (e $64 per unit) Cost of goods sald (e $37 per unit) Gross margin Selling and administrative expenses 1, 636, 000 756, 000 331, 000 Net operating incoe $ 425, 000 * $3 per unit variable, $247,000 fixed each year The company's $37 unit product cost is computed as follows: Direct materials $ 6 10 Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($391, 00e+ 23, 000 units) 4. 17 $ 37 Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 23, 000 18, 000 Year 2 Units produced Units sold 23, 000 28, 000 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 27 3. Reconcile the absorption costing and the variable costing net operating income figures for each yeat

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

2 Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units × $45 per unit) $ 3,600,000 Cost of goods sold 2,000,000 Gross profit 1,600,000 Selling and administrative expenses 560,000 Income $ 1,040,000 Additional Information Selling and administrative expenses consist of $400,000 in annual fixed expenses and $2 per unit in variable selling and administrative expenses. The company's product cost of $25 per unit consists of the following. Direct materials $ 4 per unit Direct labor $ 10 per unit Variable overhead $ 4 per unit Fixed overhead ($700,000 / 100,000 units) $ 7 per unit Required:Prepare an income statement for the company under variable costing.
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Sales (862 per unit) Year 2 $930,000 $1,550,000 495,000 Cost of goods sold t# $33 per unit) Gross margin 625,000 435,000 725,000 Selling and adninistrative expenses 292.000 322,000 Set operating income $ 143,000 $ 403,000 *$3 per unit variable: $247,000 fixed each year. The company's $33 unit product cost is computed as follows: Dirpet materials Diret labor Variable manufacturing overhead 3 13 Fixed manufacturing overhead (5260,000 20,000 unita) Absorption costing unit product cost Production and cost data for the first two years of operations are Year 1 Year 2 Units produced 20,000 20,000 thits sold 15,000 25,000 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 27 3. Reconcile the absorption costing and the variable costing net operating income figures…
Whitman Company has just completed its first year of operations. The company's traditional format income statement for the year follows: Whitman Company Income Statement Sales (35,000 units × $25 per unit) Cost of goods sold (35,000 units × $15 per unit) Gross margin Selling and administrative expenses Net operating income Amount $ 875,000 525,000 350,000 278,000 $ 72,000 The company's selling and administrative expenses consist of $208,000 per year in fixed expenses and $2 per unit sold in variable expenses. The $15 unit product cost given above is computed as follows: Direct materials Direct labor Variable overhead Fixed overhead ($100,000 ÷ 50,000 units) Unit product cost (under traditional costing) $ 6 6 1 2 $15 Required: 1. Prepare a contribution format income statement for the year ended December 31. 2. What was the contribution toward fixed expenses and profits for each unit sold? (State this figure in a single dollar amount per snowboard.) 3. What would operating income be if…
s
The contribution format income statement for Huerra Company for last year is given below. Total $1,006,000 603,600 Unit $ 50.30 30.18 402,400 20.12 322,400 16.12 Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 40% Net income 80,000 32,000 $ 48,000 4.00 1.60 $2.40 The company had average operating assets of $502,000 during the year. Required: 1. Compute the company's margin, turnover, and return on investment (ROI) for the period. For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (1) above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $93,000. 3. The company achieves a cost savings of $7,000 per year by using less costly materials. 4. The company…
Evans Company reported the following: Manufacturing costs Units manufactured Units sold Beginning inventory $2,385,000 53,000 40,000 units sold for $100 per unit O units What is the amount of gross profit margin? $2,915,000 $4,000,000 $1,615,000 $2,200,000
Whitman Company Income Statement Sales (38,000 units $41.60 per unit) Cost of goods sold (38,000 units x $23 per unit) Gross margin Selling and administrative expenses $ 1,580,800 874,000 706,800 475,000 Net operating income $ 231,800 The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 per unit sold in variab expenses. The $23 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead $ 11 4 4 Fixed manufacturing overhead ($216,000 + 54,000 units) Absorption costing unit product cost 4 $ 23 Required: 1. Redo the company's Income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating Income on your variable costing Income statement and the net operating Income on the absorption costing Income statement above. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Redo the company's…
Hanshaben
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 (@ $42 per unit) 798,000 1,218,000 Gross margin 380,000 580,000 Selling and administrative expenses* 306,000 336,000 Net operating income $ 74,000 $ 244,000 * $3 per unit variable; $249,000 fixed each year. The company’s $42 unit product cost is computed as follows: Direct materials $ 8 Direct labor 11 Variable manufacturing overhead 5 Fixed manufacturing overhead ($432,000 -: 24,000 units) 18 Absorption costing unit product cost $ 42 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…
2. A condensed income statement by product line for Master Energy Co. indicated the following for the Master Energy product line for the past year: Revenues and Costs Dollar Amount Sales $12,500,000 Cost of goods sold Gross profit Operating expenses Loss from operations 8,250,000 4,250,000 6,010,000 (1,760,000) It is estimated that 25% of the cost of goods sold represents fixed factory overhead costs and that 15% of the operating expenses are fixed. Because Master Energy is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated January 31st to determine whether Master Energy should be continued (Alternative 1) or discontinued (Alternative 2). b. Should Master Energy be retained? Explain.
The following is the year ended data for Tiger Company: Sales Revenue $58,000 Cost of Goods Manufactured 21,000 Beginning Finished Goods Inventory 1,100 Ending Finished Goods Inventory 2,200 Selling Expenses 15,000 Administrative Expenses 3,900 What is the gross profit? A. $22,100 B. $38,100 C. $19,200 D.
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (40,000 units x $44.60 per unit) Cost of goods sold (40,000 units x $22 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,784,000 880,000 904,000 460,000 $ 444,000 The company's selling and administrative expenses consist of $300,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $22 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($180,000 + 45,000 units) Absorption costing unit product cost Required: $ 10 5 3 4 $ 22 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption…