Sales (@ $63 per unit)Cost of goods sold (@ $33 per unit)Gross marginSelling and administrative expenses*Net operating incomeDirect materialsDirect labor*$3 per unit variable; $252,000 fixed each year.The company's $33 unit product cost is computed as follows:Year 1Year 2$ 1,197,000 $1,827,000Units producedUnits sold627,000570,000309,000$ 261,000Variable manufacturing overheadFixed manufacturing overhead ($312,000 + 24,000 units)Absorption costing unit product costProduction and cost data for the first two years of operations are:Year 124,00019,000Year 224,00029,000957,000870,000339,000$ 531,000$61213$ 33Required: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.

Variable costing method :— Under this method, Product cost is calculated by adding direct material,…

Answered: Sales (@ $63 per unit) Cost of goods…

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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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@$62 per unit) Cost of goods sold (@ $40 per unit) Gross margin Selling and administrative expenses* Net operating income * $3 per unit variable; $249,000 fixed each year. The company's $40 unit product cost is computed as follows: Units produced Units sold Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($330,000 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 Year 2 $ 1,054,000 $ 1,674,000 1,080,000 594,000 330,000 $ 264,000 Year 1 22,000 17,000 Required 1 680,000 374,000 300,000 $ 74,000 Required 2 Required 3 Year 2 22,000 27,000 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…
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