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During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $61 per

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

Year 1 Year 2
Sales (@ $61 per unit) $ 1,159,000 $ 1,769,000
Cost of goods sold (@ $36 per unit) 684,000 1,044,000
Gross margin 475,000 725,000
Selling and administrative expenses* 303,000 333,000
Net operating income $ 172,000 $ 392,000

* $3 per unit variable; $246,000 fixed each year.

The companys $36 unit product cost is computed as follows:

Direct materials $ 8
Direct labor 11
Variable manufacturing overhead 5
Fixed manufacturing overhead ($288,000 24,000 units) 12
Absorption costing unit product cost $ 36

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?

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2. What is the variable costing net operating income in Year 1 and in Year 2?

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3. Reconcile the absorption costing and the variable costing net operating income figures for each year.

image text in transcribed Using variable costing, what is the unit product cost for both years? What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus ign.) Complete this question by entering your answers in the tabs below. Reconcile the absorption costing and the variable costing net operating income figures for each year

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