Sales (@ $63 per unit) Cost of goods sold (@ $33 per unit) Gross margin Selling and administrative expenses* Net operating income $3 per unit variable; $252,000 fixed each year. The company's $33 unit product cost is computed as follows: Year 1 Year 2 $ 1,197,000 $ 1,827,000 957,000 870,000 339,000 $ 531,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($312,000+ 24,000 units) Absorption costing unit product cost Units produced Units sold 627,000 570,000 309,000 $261,000 Production and cost data for the first two years of operations are: Year 1 24,000 19,000 Year 2 24,000 29,000 $6 12 2 13 $33 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.

Sales (@ $63 per unit) Cost of goods sold (@ $33 per unit) Gross margin Selling and administrative expenses* Net operating income $3 per unit variable; $252,000 fixed each year. The company's $33 unit product cost is computed as follows: Year 1 Year 2 $ 1,197,000 $ 1,827,000 957,000 870,000 339,000 $ 531,000 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($312,000+ 24,000 units) Absorption costing unit product cost Units produced Units sold 627,000 570,000 309,000 $261,000 Production and cost data for the first two years of operations are: Year 1 24,000 19,000 Year 2 24,000 29,000 $6 12 2 13 $33 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

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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