Problem 6-19 (Algo) Variable Costing Income Statement; Reconciliation (LO,6-1, LO6-2, LO6-3)During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows:Year 1$ 1,037,000595,000442,000302,000140,000Year 2Sales (e 561 per unit)Cost of gooda sold (e $35 per unit)Gross marginSelling and administrative expenses$ 1,647,000945,000702,000332,0004:0318pedNet operating income370,000* $3 per unit variable; $251,000 fixed each year.The company's $35 unit product cost is computed as follows:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overhead ($352,000 - 22,000 units)$ 61116ncesAbsorption costing unit product cost$ 35Production and cost data for the first two years of operations are:Year 1Year 2Units producedUnita sold22,00017,00022,00027,000Required: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.

Under variable costing, Units product cost include variable manufacturing costs such as direct…

Year 1 Sales (e 561 per unit) Cost of gooda sold (e $35 per unit) Gross margin selling and administrative expenses et operating income $ 1,037,000 595,000 442,000 302,000 140,000 Year 2 $ 1,647,000 945,000 702,000 332,000 370,000 3 per unit variable; $251,000 fixed each year. e company's $35 unit product cost is computed as follows: irect materials irect labor arlable manufacturing overhead ixed manufacturing overhead ($352,000 - 22,000 units) bsorption costing unit product cost $ 6 11 16 $ 35 duction and cost data for the first two years of operations are: Year 1 mits produced nita sold 22,000 17,000 Year 2 22,000 27,000

Year 1 Sales (e 561 per unit) Cost of gooda sold (e $35 per unit) Gross margin selling and administrative expenses et operating income $ 1,037,000 595,000 442,000 302,000 140,000 Year 2 $ 1,647,000 945,000 702,000 332,000 370,000 3 per unit variable; $251,000 fixed each year. e company's $35 unit product cost is computed as follows: irect materials irect labor arlable manufacturing overhead ixed manufacturing overhead ($352,000 - 22,000 units) bsorption costing unit product cost $ 6 11 16 $ 35 duction and cost data for the first two years of operations are: Year 1 mits produced nita sold 22,000 17,000 Year 2 22,000 27,000

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 11MCQ: Garrett Company provided the following information: Common fixed cost totaled 46,000. Garrett...

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Problem 6-19 (Algo) Variable Costing Income Statement; Reconciliation [LO,6-1, LO6-2, LO6-3] During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 $1,220,000 $1,830,000 780,000 1,170,000 440,000 313,000 $ 127,000 Sales (@ $61 per unit) Cost of goods sold (@ $39 per unit) Gross margin Selling and administrative expenses* Net operating income * *$3 per unit variable; $253,000 fixed each year. The company's $39 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($450,000 ÷ 25,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Year 1 25,000 20,000 Year 2 25,000 30,000 660,000 343,000 $ 317,000 $7 10 4 18 $ 39 Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net operating income…
Problem 3 (Variable Costing Income Statement; Reconciliation) During Floppy Company's first two years of operations, the company reported net operating income as follows (absorption costing basis): Year 1 Year 2 Sales (at P50 per unit) Less cost of goods sold: Beginning inventory Add cost of goods manufactured (at P34 per unit) Goods available for sale P1,000,000 P1,500,000 170,000 850,000 850,000 170,000 680,000 320,000 310,000 P 10,000 850,000 1,020,000 Less ending inventory (at P34 per unit) Cost of goods sold Gross margin Less selling and administrative expenses* Net operating income 1,020,000 480,000 340,000 P 140,000 P3 per unit variable; P250,000 fixed each year.
Compute for the net operating income under variable costing for year 1 Puif Company's absorption costing income statements for the last two years are presented below: Year 1 Year 2 Sales $70,000 $90,000 Less cost of goods sold: Beginning inventory Add cost of goods manufactured 6,000 48,000 48,000 Goods available for sale 48,000 54,000 Less ending inventory | Cost of goods sold Gross margin Less selling & admin. expenses 6,000 42,000 54,000 28,000 36,000 25,000 31,000 |Net operating income $ 3,000 $ 5,000 Data on units produced and sold in each of these years are given below: Year 1 Year 2 Units in beginning inventory Units produced Units sold 1,000 8,000 8,000 7,000 9,000 Fixed factory overhead totaled $16,000 in each year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.
MC Qu. 7-65 A recent income statement of McClennon Corporation... A recent income statement of McClennon Corporation reported the following data: Units sold 7,500 Sales revenue $ 8,812,500 Variable costs 4,500,000 Fixed costs 2,840,000 If the company desired to earn a target profit of $1,875,000, it would have to sell: Multiple Choice 5,378 units. 8,200 units. 9,760 units. 11,508 units. None of the answers is correct.
Problem 5A-7 (Algo) Cost Behavior; High-Low Method; Contribution Format Income Statement [LO5-10] Morrisey & Brown, Limited, is the sole distributor of a product with growing sales. Its income statements for the three most recent months follow: Morrisey & Brown, Limited Income Statements For the Three Months Ended September 30 July Sales in units Sales Cost of goods sold Gross margin Selling and administrative expenses: Advertising expense Shipping expense Salaries and commissions Insurance expense Depreciation expense Total selling and administrative expenses Net operating income 4,750 $ 546,250 327,750 218,500 31,800 35,500 81,000 6,550 18,000 172,850 $ 45,650 August 5,250 $603,750 362,250 241,500 31,800 38,100 87,300 6,550 18,000 181,750 $ 59,750 September 5,750 $ 661,250 396,750 264,500 31,800 40,700 93,600 6,550 18,000 190,650 $ 73,850 Required: 1. By analyzing data from the company's income statements, classify each of its expenses (including cost of goods sold) as either…
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Assume that more than one product is being sold in each of the four following case situations: Case #1 Case #2 Case #3 Case #4 Sales $ 443,000 203,000 292,000 Variable expenses 140,070 84,680 Fixed expenses 52,000 470,000 Net operating income (loss) $ 82,350 $ 10,930 90,000 $ (18,680) Contribution margin ratio (percent) 45 % % 80 %
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follws: Year 2 Sales (e $64 per unit) Cost of goods sold (e $37 per unit) Gross margin Selling and administrative expenses Year 1 $ 1,152, 000 $ 1,792, 000 666, 000 486, 000 301, 000 $ 185, 000 1,836, 000 756, 000 331, 000 $ 425, 000 Net operating incone •$3 per unit varlable, $247,000 fixed each year. The company's $37 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufactüring overhead ($391, 00e + 23, 000 units) $ 6 10 4. 17 $ 37 Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Year 1 23, 000 18, 000 Year 2 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 2? 3. Reconcile the absorption costing and the…