Puif Company's absorption costing income statements for the last two years are presented below: Year 1 Year 2 Sales $70,000 $90,000 Less cost of goods sold: Beginning inventory Add cost of goods manufactured 6,000 48,000 48,000 Goods available for sale 48,000 54,000 Less ending inventory 6,000 Cost of goods sold 42,000 54,000 Gross margin Less selling & admin. expenses Net operating income 28,000 36,000 25,000 31,000 $ 3,000 $ 5,000 Data on units produced and sold in each of these years are given below: Year 1 Year 2 Units in beginning inventory Units produced 1,000 8,000 8,000 Units sold 7,000 9,000 Fixed factory overhead totaled $16,000 in each year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.

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Chapter1: Financial Statements And Business Decisions
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Compute for the net operating income under variable costing for year 2

Duif Company's absorption costing income statements for the last two years are presented
below:
Year 1
Year 2
Sales
$70,000
$90,000
Less cost of goods sold:
Beginning inventory
6,000
Add cost of goods manufactured
48,000
48,000
54,000
Goods available for sale
48,000
Less ending inventory
Cost of goods sold
6,000
42,000
54,000
28,000
Gross margin
Less selling & admin. expenses
36,000
25,000
31,000
Net operating income
$ 3,000
$ 5,000
Data on units produced and sold in each of these years are given below:
Year 1
Year 2
Units in beginning inventory
Units produced
1,000
8,000
8,000
Units sold
7,000
9,000
Fixed factory overhead totaled $16,000 in each year. This overhead was applied to
products at a rate of $2 per unit. Variable selling and administrative expenses were $3
per unit sold.
Transcribed Image Text:Duif Company's absorption costing income statements for the last two years are presented below: Year 1 Year 2 Sales $70,000 $90,000 Less cost of goods sold: Beginning inventory 6,000 Add cost of goods manufactured 48,000 48,000 54,000 Goods available for sale 48,000 Less ending inventory Cost of goods sold 6,000 42,000 54,000 28,000 Gross margin Less selling & admin. expenses 36,000 25,000 31,000 Net operating income $ 3,000 $ 5,000 Data on units produced and sold in each of these years are given below: Year 1 Year 2 Units in beginning inventory Units produced 1,000 8,000 8,000 Units sold 7,000 9,000 Fixed factory overhead totaled $16,000 in each year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.
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