Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. during heaton companys first two years of operatio

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

70.2K

Verified Solution

Question

Accounting

During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows:

Year 1 Year 2
Sales (@ $63 per unit) $ 1,197,000 $ 1,827,000
Cost of goods sold (@ $39 per unit) 741,000 1,131,000
Gross margin 456,000 696,000
Selling and administrative expenses* 307,000 337,000
Net operating income $ 149,000 $ 359,000

* $3 per unit variable; $250,000 fixed each year.

The companys $39 unit product cost is computed as follows:

Direct materials $ 7
Direct labor 8
Variable manufacturing overhead 4
Fixed manufacturing overhead ($480,000 24,000 units) 20
Absorption costing unit product cost $ 39

Production and cost data for the first two years of operations are:

Year 1 Year 2
Units produced 24,000 24,000
Units sold 19,000 29,000

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.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

1 point Let F 4xyz 2 sin x 2x z 2x y Find a function...

Calculus
Q

Data from a cloud-seeding experiment are in the file CLOUDS on the course website. The file...

Statistics
Q

you should pharaprase the case study in your own words and make it simple business words...

Operations Management
Q

What kind of leadership style do you think our current president, Donald Trump, exhibited on the...

Psychology
Q

Signal transduction may result in changes in gene expression and cell function, which may alter...

Biology
Q

19 A network of resistances is connected to a 16V battery with internal resistance of...

Physics
Q

A Plane mirror is placed on the other side of a convex lens having a...

Physics
Q

Find the differential dy of the given function y 6x 5 dy

Calculus
Q

The gender and year of each of the 221 students in a high school band...

Algebra
Q

Questions: (a) Without narrations, or cross references, prepare journal...

Accounting
Q

Tinsley, Inc., produces high-end party favors for corporate events. very labor intensive process and as...

Accounting
Q

com/im/takeAssignment/takeAssignmentM Department A had 1,000 units in work in process that were 60% completed at...

Accounting