Sales (@ $63 per unit) Cost of goods sold (@ $33 per unit) Gross margin Selling and administrative expenses* Net operating income $3 per unit variable; $252,000 fixed each year. The company's $33 unit product cost is computed as follows: Year 1 Year 2 $ 1,197,000 $ 1,827,000 957,000 870,000 339,000 $ 531,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($312,000+ 24,000 units) Absorption costing unit product cost Units produced Units sold 627,000 570,000 309,000 $261,000 Production and cost data for the first two years of operations are: Year 1 24,000 19,000 Year 2 24,000 29,000 $6 12 2 13 $33 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.
Sales (@ $63 per unit) Cost of goods sold (@ $33 per unit) Gross margin Selling and administrative expenses* Net operating income $3 per unit variable; $252,000 fixed each year. The company's $33 unit product cost is computed as follows: Year 1 Year 2 $ 1,197,000 $ 1,827,000 957,000 870,000 339,000 $ 531,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($312,000+ 24,000 units) Absorption costing unit product cost Units produced Units sold 627,000 570,000 309,000 $261,000 Production and cost data for the first two years of operations are: Year 1 24,000 19,000 Year 2 24,000 29,000 $6 12 2 13 $33 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sales (@ $63 per unit)
Cost of goods sold (@ $33 per unit)
Gross margin
Selling and administrative expenses*
Net operating income
Direct materials
Direct labor
*$3 per unit variable; $252,000 fixed each year.
The company's $33 unit product cost is computed as follows:
Year 1
Year 2
$ 1,197,000 $1,827,000
Units produced
Units sold
627,000
570,000
309,000
$ 261,000
Variable manufacturing overhead
Fixed manufacturing overhead ($312,000 + 24,000 units)
Absorption costing unit product cost
Production and cost data for the first two years of operations are:
Year 1
24,000
19,000
Year 2
24,000
29,000
957,000
870,000
339,000
$ 531,000
$6
12
13
$ 33
Required:
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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