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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: $ Sales ( $60 per unit) Cost of
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: $ Sales ( $60 per unit) Cost of goods sold ( $39 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 960,000 624,000 336,000 301,000 35,000 Year 2 $ 1,560,000 1,014,000 546,000 331,000 $ 215,000 $ $3 per unit variable: $253,000 fixed each year. The company's $39 unit product cost is computed as follows: $ 6 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($378,000 + 21,000 units) Absorption conting unit product cost 2 18 $ 39 Production and cost data for the first two years of operations are: Units produced Units sold Year 1 21,000 16,000 Year 2 21,000 26,000 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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