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goods sold (@ $31 per unit) rgin and administrative expenses. ating income it variable; $251.000 fixed each year. 465,000 465,000 296,000 $ 169,000

goods sold (@ $31 per unit) rgin and administrative expenses. ating income it variable; $251.000 fixed each year. 465,000 465,000 296,000 $ 169,000

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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es During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 $1,550,000 Sales (@ $62 per unit) Cost of goods sold (@ $31 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable: $251,000 fixed each year. The company's $31 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($240,000+ 20,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 Year 2 20,000 20,000 15,000 25,000 Units produced Units sold $7 9 3 12 $ 31 Year 1 $ 930,000 465,000 465,000 296,000 $ 169,000 775,000 775,000 326,000 $ 449,000 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 2? 3. Reconcile the absorption costing and the variable costing net operating income figures for each year.
Transcribed Image Text:es During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 $1,550,000 Sales (@ $62 per unit) Cost of goods sold (@ $31 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable: $251,000 fixed each year. The company's $31 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($240,000+ 20,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 Year 2 20,000 20,000 15,000 25,000 Units produced Units sold $7 9 3 12 $ 31 Year 1 $ 930,000 465,000 465,000 296,000 $ 169,000 775,000 775,000 326,000 $ 449,000 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 2? 3. Reconcile the absorption costing and the variable costing net operating income figures for each year.
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