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During Heaton Company's first two years of operations, it reported absorption costing net operating income...

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Accounting

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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 (@ $39 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 $ 1,024,000 624,000 400,000 301,000 $ 99,000 Year 2 $ 1,664,000 . 1,014,000 650,000 331,000 $ 319,000 *$3 per unit variable; $253,000 fixed each year. The company's $39 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($399,000 = 21,000 units) Absorption costing unit product cost $ 7 9 4 19 $ 39 Production and cost data for the first two years of operations are: Units produced Units sold Year 1 21,000 16,000 Year 2 21,000 26,000 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

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