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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: points Sales (@ $62 per unit) Cost of
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: points Sales (@ $62 per unit) Cost of goods sold (@ $39 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 $ 1,116,000 702,000 414,000 309,000 $ \105,000 Year 2 $1,736,000 1,092,000 644,000 339,000 $ 305,000 eBook $3 per unit variable; $255,000 fixed each year. Print The company's $39 unit product cost is computed as follows: References Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($322,000 - 23,000 units) Absorption costing unit product cost 23,000 units) Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings. Production and cost data for the first two years of operations are: Units produced Units sold Year 1 23,000 18,000 Year 2 23,000 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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