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  1. business
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  3. during heaton company's first two years of operati

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: Year 1 Year 2 Sales @ $60 per unit) $ 1,020,000 $ 1,620,000 Cost of goods sold (@ $42 per unit) 714,000 1,134,000 Gross margin 306,000 486,000 Selling and administrative expenses 297,000 327,000 Net operating income $ 9,000 $ 159.000 * $3 per unit variable: $246,000 fixed each year. The company's $42 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($396,000 + 22,000 units) Absorption costing unit product cost $ 8 13 3 18 $ 42 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 22,000 22,000 Units sold 17,000 27,000 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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