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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 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 costing net operating income figures for each year. 594,000 330,000 $ 264,000 Complete this question by entering your answers in the tabs below. $7 13 5 15 $ 40 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.)

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 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 costing net operating income figures for each year. 594,000 330,000 $ 264,000 Complete this question by entering your answers in the tabs below. $7 13 5 15 $ 40 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.)

Managerial Accounting
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
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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 costing net operating income figures for each year. $ 7 13 Complete this question by entering your answers in the tabs below. 5 15 $ 40 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.)
Transcribed Image Text: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 costing net operating income figures for each year. $ 7 13 Complete this question by entering your answers in the tabs below. 5 15 $ 40 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.)
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