Po.8. Required 1 Required 2 Required 3Using variable costing, what is the unit product cost for both years?Unit product cost6Required 1 Required 2 Required 3What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minussign.)Net operating income (loss)Year 1Year 2Required 1 Required 2Required 3Reconcile the absorption costing and the variable costing net operating income figures for each year.Reconciliation of Variable Costing and Absorption Costing Net Operating IncomesYear 1Variable costing net operating income (loss)Add (deduct) fixed manufacturing overhead deferred in (released from) inventory underabsorption costingAbsorption costing net operating incomeYear 2 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 (@ $35 per unit)Gross marginSelling and administrative expenses*Net operating income*$3 per unit variable; $253,000 fixed each year.The company's $35 unit product cost is computed as follows:Direct materialsDirect laborYear 1Year 2$ 1,024,000 $1,664,000560,000464,000301,000$ 163,000Variable manufacturing overheadFixed manufacturing overhead ($294,000 ÷ 21,000 units)Absorption costing unit product costProduction and cost data for the first two years of operations are:Year 221,00026,000Units producedUnits soldYear 121,00016,000910,000754,000331,000$ 423,000$612314$35Required: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.

Using variable costing, only variable manufacturing costs are treated as product cost. The fixed…

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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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