During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 $ 1,890,000 1,080,000 810,000 343,000 $ 467,000 Sales (@ $63 per unit) Cost of goods sold (@ $36 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $253,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($350,000 25,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Required 1 Year 1 $ 1,260,000 720,000 540,000 313,000 $ 227,000 Year 1 25,000 20,000 Required 2 Unit product poot 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. Year 2 25,000 30,000 Complete this question by entering your answers in the tabs below. Required 3 $8 9 5 Using variable costing, what is the unit product cost for both years? 14 $36
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 $ 1,890,000 1,080,000 810,000 343,000 $ 467,000 Sales (@ $63 per unit) Cost of goods sold (@ $36 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $253,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($350,000 25,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Required 1 Year 1 $ 1,260,000 720,000 540,000 313,000 $ 227,000 Year 1 25,000 20,000 Required 2 Unit product poot 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. Year 2 25,000 30,000 Complete this question by entering your answers in the tabs below. Required 3 $8 9 5 Using variable costing, what is the unit product cost for both years? 14 $36
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 16E
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