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Company's first two years of operations,...

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Accounting

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Company's first two years of operations, the company reported absorption costing net During operating uneas follows: Year 1 595,000 476,000 Year 2 Sales (@ S63 per unit) Cost of goods sold (@ $35 per unit) $1,071,000 1,701,000 945,000 Gross margin Selling and administrative expenses 756,000 333,000 303,000 Net operating income $ 173,000 423,000 $3 per unit variable; $252,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($264,000 22,000 units) 12 13 Absorption costing unit product cost 35 Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings. Production and cost data for the two years are: Year 1 22,000 22,000 17,000 27,000 Year 2 Units produced Units sold Required 1. Prepare a variable costing contribution format income statement for each year. Year 2

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