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Problem 4-19 (Algo) Variable Costing Income Statement; Reconciliation [LO4-2, L04-3] During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $63 per unit) Cost of goods sold (@$35 per unit) Gross margin Selling and administrative expenses* Net operating income Direct materials Direct labor *$3 per unit variable; $250,000 fixed each year. The company's $35 unit product cost is computed as follows: Year 1 $ 945,000 525,000 420,000 295,000 125,000 Variable manufacturing overhead Fixed manufacturing overhead ($360,000+ 20,000 units) Absorption costing unit product cost Units produced Units sold $ Year 1 20,000 15,000 Year 2 20,000 25,000 Year 2 $ 1,575,000 875,000 700,000 325,000 $ 375,000 $ Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges c production equipment and buildings. Production and cost data for the first two years of operations are: 6 8 3 18 $ 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.

Problem 4-19 (Algo) Variable Costing Income Statement; Reconciliation [LO4-2, L04-3] During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $63 per unit) Cost of goods sold (@$35 per unit) Gross margin Selling and administrative expenses* Net operating income Direct materials Direct labor *$3 per unit variable; $250,000 fixed each year. The company's $35 unit product cost is computed as follows: Year 1 $ 945,000 525,000 420,000 295,000 125,000 Variable manufacturing overhead Fixed manufacturing overhead ($360,000+ 20,000 units) Absorption costing unit product cost Units produced Units sold $ Year 1 20,000 15,000 Year 2 20,000 25,000 Year 2 $ 1,575,000 875,000 700,000 325,000 $ 375,000 $ Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges c production equipment and buildings. Production and cost data for the first two years of operations are: 6 8 3 18 $ 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.

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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Problem 4-19 (Algo) Variable Costing Income Statement; Reconciliation [LO4-2, LO4-3] During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@$63 per unit) Cost of goods sold (@$35 per unit) Gross margin Selling and administrative expenses* Net operating income $ Units produced Units sold $ *$3 per unit variable; $250,000 fixed each year. The company's $35 unit product cost is computed as follows: Year 1 Year 2 20,000 15,000 Year 1 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($360,000+ 20,000 units) Absorption costing unit product cost 20,000 25,000 945,000 525,000 420,000 295,000 125,000 Year 2 $ 1,575,000 875,000 700,000 325,000 375,000 $ Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings. Production and cost data for the first two years of operations are: $ 6 8 3 18 $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:Problem 4-19 (Algo) Variable Costing Income Statement; Reconciliation [LO4-2, LO4-3] During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@$63 per unit) Cost of goods sold (@$35 per unit) Gross margin Selling and administrative expenses* Net operating income $ Units produced Units sold $ *$3 per unit variable; $250,000 fixed each year. The company's $35 unit product cost is computed as follows: Year 1 Year 2 20,000 15,000 Year 1 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($360,000+ 20,000 units) Absorption costing unit product cost 20,000 25,000 945,000 525,000 420,000 295,000 125,000 Year 2 $ 1,575,000 875,000 700,000 325,000 375,000 $ Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings. Production and cost data for the first two years of operations are: $ 6 8 3 18 $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.
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. X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. 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 $ (35,000) $ (465,000) X < Required 1 Required 3 >
Transcribed Image Text: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. X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. 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 $ (35,000) $ (465,000) X < Required 1 Required 3 >
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