During Heaton Company's first two years of operations, it reported absorption costing net operating income as follws:Year 2Sales (e $64 per unit)Cost of goods sold (e $37 per unit)Gross marginSelling and administrative expensesYear 1$ 1,152, 000 $ 1,792, 000666, 000486, 000301, 000$ 185, 0001,836, 000756, 000331, 000$ 425, 000Net operating incone•$3 per unit varlable, $247,000 fixed each year.The company's $37 unit product cost is computed as follows:Direct materialsDirect laborVariable manufacturing overheadFixed manufactüring overhead ($391, 00e + 23, 000 units)$ 6104.17$ 37Absorption costing unit product costProduction and cost data for the first two years of operations are:Units producedUnits soldYear 123, 00018, 000Year 223, 00028, 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

Answered: Image /qna-images/answer/e891f36e-23b9-41b1-901e-8277130f3d94.jpg

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 $1,152, 000 S 1, 792, 000 666, 000 486, 000 301, 000 $ 185, 000 Year 2 Sales (e $64 per unit) Cost of goods sald (e $37 per unit) Gross margin Selling and administrative expenses 1, 636, 000 756, 000 331, 000 Net operating incoe $ 425, 000 * $3 per unit variable, $247,000 fixed each year The company's $37 unit product cost is computed as follows: Direct materials $ 6 10 Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($391, 00e+ 23, 000 units) 4. 17 $ 37 Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 23, 000 18, 000 Year 2 Units produced Units sold 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 27 3. Reconcile the absorption costing and the variable costing net operating income figures for each yeat

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 $1,152, 000 S 1, 792, 000 666, 000 486, 000 301, 000 $ 185, 000 Year 2 Sales (e $64 per unit) Cost of goods sald (e $37 per unit) Gross margin Selling and administrative expenses 1, 636, 000 756, 000 331, 000 Net operating incoe $ 425, 000 * $3 per unit variable, $247,000 fixed each year The company's $37 unit product cost is computed as follows: Direct materials $ 6 10 Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($391, 00e+ 23, 000 units) 4. 17 $ 37 Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 23, 000 18, 000 Year 2 Units produced Units sold 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 27 3. Reconcile the absorption costing and the variable costing net operating income figures for each yeat

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...

See similar textbooks

Similar questions

The following information is available for Cooke Company for the current year: The gross margin is 40% of net sales. What is the cost of goods available for sale? a. 5840,000 b. 960,000 c. 1,200,000 d. 1,220,000
During the current year, Sokowski Manufacturing earned income of $350,000 from total sales of $5,500,000 and average capital assets of $12,000,000. A. Based on this information, calculate asset turnover. B. Using the sales margin from the previous exercise, what is the total ROI for the company during the current year?
Cost of goods sold Pine Creek Company completed 200,000 units during the year at a cost of 3,000,000. The beginning finished goods inventory was 25,000 units at 310,000. Determine the cost of goods sold for 210,000 units, assuming a FIFO cost flow.
Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Refer to Exercise 2.21. Last calendar year, Ellerson recognized revenue of 1,312,000 and had selling and administrative expenses of 204,600. Required: 1. What is the cost of goods sold for last year? 2. Prepare an income statement for Ellerson for last year.
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 $ 1,037,000 $ 1,647,000 945,000 Sales (@ $61 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses* 595,000 442,000 303,000 702,000 333,000 Net operating income $4 139,000 369,000 $3 per unit variable; $252,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials 7 Direct labor 8. Variable manufacturing overhead Fixed manufacturing overhead ($418,000 + 22,000 units) 1 19 Absorption costing unit product cost $ 35 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced Units sold 22,000 17,000 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…
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $63 per unit) $ 1,008,000 $ 1,638,000 Cost of goods sold (@ $32 per unit) 512,000 832,000 Gross margin 496,000 806,000 Selling and administrative expenses* 302,000 332,000 Net operating income $ 194,000 $ 474,000 * $3 per unit variable; $254,000 fixed each year. The company’s $32 unit product cost is computed as follows: Direct materials $ 8 Direct labor 10 Variable manufacturing overhead 2 Fixed manufacturing overhead ($252,000 ÷ 21,000 units) 12 Absorption costing unit product cost $ 32 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 21,000 21,000 Units sold 16,000 26,000 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.…
During Heaton Company's first two years of operations, It reported absorption costing net operating income as follows: Sales (e $63 per unit) Cost of goods sold (e $37 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 $ 1,071,000 629,000 442,000 298,000 $ 144,000 Year 2 $ 1,701,000 999,000 702,000 328,000 $ 374,000 $3 per unit variable; $247,000 fixed each year. The company's $37 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($374,000 + 22,000 units) Absorption costing unit product cost $ 5 10 17 $ 37 Production and cost data for the first two years of operations are: Year 1 22,000 17,000 Year 2 Units produced Units sold 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…
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 Sales (@ $63 per unit) Cost of goods sold (@ $36 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 $ 1,071,000 612,000 $ 1,701,000 972,000 459,000 302,000 729,000 332,000 $ 157,000 $ 397,000 * $3 per unit variable; $251,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($352,000 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Required: Year 1 Year 2 22,000 22,000 17,000 27,000 $5 11 4 16 $ 36 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…
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $64 per unit) Cost of goods sold (@ $36 per unit) Gross margin Year 1 $ 1,152,000 648,000 504,000 302,000 $ 202,000 Year 2 $ 1,792,000 1,008,000 784,000 332,000 $ 452,000 Selling and administrative expenses* Net operating income * $3 per unit variable; $248,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($345,000 ÷ 23,000 units) Absorption costing unit product cost $ 9 10 2 15 $ 36 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 23,000 23,000 18,000 28,000 Units sold 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…
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $64 per unit) $ 1,024,000 $ 1,664,000 Cost of goods sold (@ $31 per unit) 496,000 806,000 Gross margin 528,000 858,000 Selling and administrative expenses* 299,000 329,000 Net operating income $ 229,000 $ 529,000 * $3 per unit variable; $251,000 fixed each year. The company’s $31 unit product cost is computed as follows: Direct materials $ 7 Direct labor 8 Variable manufacturing overhead 5 Fixed manufacturing overhead ($231,000 ÷ 21,000 units) 11 Absorption costing unit product cost $ 31 Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings. Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced…
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $63 per unit) $ 1,197,000 $ 1,827,000 Cost of goods sold (@ $41 per unit) 779,000 1,189,000 Gross margin 418,000 638,000 Selling and administrative expenses* 305,000 335,000 Net operating income $ 113,000 $ 303,000 * $3 per unit variable; $248,000 fixed each year. The company’s $41 unit product cost is computed as follows: Direct materials $ 7 Direct labor 13 Variable manufacturing overhead 2 Fixed manufacturing overhead ($456,000 ÷ 24,000 units) 19 Absorption costing unit product cost $ 41 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 24,000 24,000 Units sold 19,000 29,000 Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net…
During Heaton Company’s first two years of operations, the company reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $61 per unit) $ 976,000 $ 1,586,000 Cost of goods sold (@ $34 per unit) 544,000 884,000 Gross margin 432,000 702,000 Selling and administrative expenses* 295,000 325,000 Net operating income $ 137,000 $ 377,000 * $3 per unit variable; $247,000 fixed each year. The company’s $34 unit product cost is computed as follows: Direct materials $ 6 Direct labor 8 Variable manufacturing overhead 2 Fixed manufacturing overhead ($378,000 ÷ 21,000 units) 18 Absorption costing unit product cost $ 34 Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consistsof depreciation charges on production equipment and buildings. Production and cost data for the two years are: Year 1 Year 2 Units…