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as pic shows Operating data for Allegiant Company and its absorption costing income statements for the last two years are presented below: Year 1 Year

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Operating data for Allegiant Company and its absorption costing income statements for the last two years are presented below: Year 1 Year 2 Units in beginning inventory 2,000 1,000 Units produced 14,000 14,000 Units sold 15,000 12,000 Sales S 240,000 S 320,000 Cost of Goods Sold Beginning inventory 21,000 10,500 Add: Cost of Goods Manufactured 147,000 147,000 Goods available for sale 163,000 157,500 Less: Ending inventorv 10,500 31,500 Cost of Goods Sold 157,500 126,000 Gross margin 32,500 194,000 Selling and administrative expenses 92,000 33,600 Operating income S (9,500) S 110,400 Fixed manufacturing overhead S 56,000 S 56,000 Direct material per unit S 2.00 S 2.00 Direct labour per unit S 3.00 S 3.00 Variable Manufacturing overhead per unit S 1.50 S 1.50 Variable Selling & Admin costs per unit S 2.30 S 2.30 a) What was the unit product cost in each year under variable costing Year 2 Total unit product cost b) Prepare new income statements for each year using variable costing Allegiant Company Variable Costing Income Statement Year 2 Sales Less: Variable expenses Contribution margin Operating income (loss) c) Reconcile the difference in Operating Income between variable costing and absorption costing Variable costing operating income ADD: Fixed manufacturing overhead costs deffered in inventory under Absorption Costing DEDUCT: Fixed manufacturing overhead costs released from inventory under Absorption Costing Absorption costing operating income

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