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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $63 per unit) Cost of goods

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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $63 per unit) Cost of goods sold (@ $33 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 Year 2 $ 1,134,000 $1,764,000 594,000 924,000 540,000 840,000 309,000 330,000 $ 240,000 $ 510,000 $3 per unit variable: $246,000 fixed each year. The company's $33 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($345,000 23,000 units) Absorption costing unit product cost $.5 10 3 15 $ 33 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 23,000 23,000 Units sold 18,000 28,000 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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