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During Heaton Company's first two years of operations, it reported absorption costing net operating income as fo Sales (@ $63 per unit) Cost of
During Heaton Company's first two years of operations, it reported absorption costing net operating income as fo Sales (@ $63 per unit) Cost of goods sold (@ $32 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 $ 1,197,000 608,000 Year 2 $ 1,827,000 928,000 589,000 899,000 307,000 337,000 $ 282,000 $ 562,000 $3 per unit variable; $250,000 fixed each year. The company's $32 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($336,000 24,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: $ 6 693 14 $ 32 Units produced Units sold Required: Year 1 Year 2 24,000 24,000 19,000 29,000 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 onerating income figures for each year
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