During Heaton Company's first two years of operations, it reported absorption costing net operating income as Sales (@ $64 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses* Net operating income. Year 1 Year 2 $ 1,024,000 $1,664,000 560,000 464,000 301,000 $ 163,000 *$3 per unit variable; $253,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($294,000+ 21,000 units) Absorption costing unit product cost 910,000 754,000 331,000 $ 423,000 $6 12 3 14 $ 35
During Heaton Company's first two years of operations, it reported absorption costing net operating income as Sales (@ $64 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses* Net operating income. Year 1 Year 2 $ 1,024,000 $1,664,000 560,000 464,000 301,000 $ 163,000 *$3 per unit variable; $253,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($294,000+ 21,000 units) Absorption costing unit product cost 910,000 754,000 331,000 $ 423,000 $6 12 3 14 $ 35
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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