During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $63 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses Net operating income *$3 per unit variable; $255,000 fixed each year. $ 1,071,000 $1,701,000 Year 1 Year 2 945,000 756,000 595,000 476,000 306,000 $170,000 $420,000 The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($418,000 + 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: 336,000 Units produced Units sold Required: Year 1 Year 2 22,000 22,000 17,000 27,000 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.

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $63 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses Net operating income *$3 per unit variable; $255,000 fixed each year. $ 1,071,000 $1,701,000 Year 1 Year 2 945,000 756,000 595,000 476,000 306,000 $170,000 $420,000 The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($418,000 + 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: 336,000 Units produced Units sold Required: Year 1 Year 2 22,000 22,000 17,000 27,000 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.

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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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $63 per unit) Cost of goods sold (@ $36 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $255,000 fixed each year. The company's $36 unit product cost is computed as follows: Year 1 $ 1,008,000 576,000 432,000 303,000 $ 129,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($273,000 ÷ 21,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Year 1 21,000 16,000 Year 2 21,000 26,000 Year 2 $ 1,638,000 936,000 702,000 333,000 $ 369,000 $9 12 2 13 $36 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 $ 900,000 555,000 345,000 294,000 $ 51,000 Sales (@$60 per unit) Cost of goods sold (@ $37 per unit) Gross margin Selling and administrative expenses* Net operating income * $3 per unit variable; $249,000 fixed each year. The company's $37 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($360,000+ 20,000 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 20,000 15,000 Complete this question by entering your answers in the tabs below. 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…
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 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…
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