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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 (@$35 per unit) Gross margin Selling and administrative expenses. Net operating income Direct materials Direct labor riable manufacturing overhead Year 1 $ 1,134,000 630,000 $ *$3 per unit variable: $255,000 fixed each year. The company's $35 unit product cost is computed as follows: Units produced Units sold 504,000 309,000 195,000 $ Fixed manufacturing overhead ($368,000+ 23,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 Year 2 23,000 23,000 18,000 28,000 Year 2 $ 1,764,000 980,000 784,000 339,000 445,000 $8 9 2 16 $ 35 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 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 Direct materials Direct labor riable manufacturing overhead Year 1 $ 1,134,000 630,000 $ *$3 per unit variable: $255,000 fixed each year. The company's $35 unit product cost is computed as follows: Units produced Units sold 504,000 309,000 195,000 $ Fixed manufacturing overhead ($368,000+ 23,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 Year 2 23,000 23,000 18,000 28,000 Year 2 $ 1,764,000 980,000 784,000 339,000 445,000 $8 9 2 16 $ 35 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 figures for each year.

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...
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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 (@ $35 per unit) Gross margin Selling and administrative expenses. Net operating income Direct materials Direct labor *$3 per unit variable: $255,000 fixed each year. The company's $35 unit product cost is computed as follows: Year 1 $ 1,134,000 630,000 504,000 309,000 195,000 $ Variable manufacturing overhead Fixed manufacturing overhead ($368,000+ 23,000 units) Absorption costing unit product cost Units produced Units sold Production and cost data for the first two years of operations are: Year 1 Year 2 23,000 23,000 18,000 28,000 Required 3 Required 1 Required 2 Using variable costing, what is the unit product cost for both years? Unit product cost Year 2 $ 1,764,000 980,000 784,000 339,000 445,000 $ 8 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 figures for each year. Complete this question by entering your answers in the tabs below. 9 2 16 $ 35
Transcribed Image Text: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 Direct materials Direct labor *$3 per unit variable: $255,000 fixed each year. The company's $35 unit product cost is computed as follows: Year 1 $ 1,134,000 630,000 504,000 309,000 195,000 $ Variable manufacturing overhead Fixed manufacturing overhead ($368,000+ 23,000 units) Absorption costing unit product cost Units produced Units sold Production and cost data for the first two years of operations are: Year 1 Year 2 23,000 23,000 18,000 28,000 Required 3 Required 1 Required 2 Using variable costing, what is the unit product cost for both years? Unit product cost Year 2 $ 1,764,000 980,000 784,000 339,000 445,000 $ 8 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 figures for each year. Complete this question by entering your answers in the tabs below. 9 2 16 $ 35
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