During Heaton Company’s first two years of operations, itreported absorption costing net operating income...

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Accounting

During Heaton Company’s first two years of operations, itreported absorption costing net operating income as follows: Year 1Year 2 Sales (@ $62 per unit) $ 1,054,000 $ 1,674,000 Cost of goodssold (@ $36 per unit) 612,000 972,000 Gross margin 442,000 702,000Selling and administrative expenses* 303,000 333,000 Net operatingincome $ 139,000 $ 369,000 * $3 per unit variable; $252,000 fixedeach year. The company’s $36 unit product cost is computed asfollows: Direct materials $ 6 Direct labor 11 Variablemanufacturing overhead 4 Fixed manufacturing overhead ($330,000 ÷22,000 units) 15 Absorption costing unit product cost $ 36 Fortypercent of fixed manufacturing overhead consists of wages andsalaries; the remainder consists of depreciation charges onproduction equipment and buildings. Production and cost data forthe first two years of operatons are: Year 1 Year 2 Units produced22,000 22,000 Units sold 17,000 27,000 Required: 1. Using variablecosting, what is the unit product cost for both years? 2. What isthe variable costing net operating income in Year 1 and in Year 2?3. Reconcile the absorption costing and the variable costing netoperating income figures for each year.

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1 unit product cost under variable costing Direct materials 6 direct labor 11 variable manufacturing overhead 4 unit product cost under variable costing 21 for both years 24 is the unit product cost 2 Heaton company See Answer

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In: AccountingDuring Heaton Company’s first two years of operations, itreported absorption costing net operating income as...During Heaton Company’s first two years of operations, itreported absorption costing net operating income as follows: Year 1Year 2 Sales (@ $62 per unit) $ 1,054,000 $ 1,674,000 Cost of goodssold (@ $36 per unit) 612,000 972,000 Gross margin 442,000 702,000Selling and administrative expenses* 303,000 333,000 Net operatingincome $ 139,000 $ 369,000 * $3 per unit variable; $252,000 fixedeach year. The company’s $36 unit product cost is computed asfollows: Direct materials $ 6 Direct labor 11 Variablemanufacturing overhead 4 Fixed manufacturing overhead ($330,000 ÷22,000 units) 15 Absorption costing unit product cost $ 36 Fortypercent of fixed manufacturing overhead consists of wages andsalaries; the remainder consists of depreciation charges onproduction equipment and buildings. Production and cost data forthe first two years of operatons are: Year 1 Year 2 Units produced22,000 22,000 Units sold 17,000 27,000 Required: 1. Using variablecosting, what is the unit product cost for both years? 2. What isthe variable costing net operating income in Year 1 and in Year 2?3. Reconcile the absorption costing and the variable costing netoperating income figures for each year.