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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: $ Sales (@ $62 per unit) Cost of
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: $ Sales (@ $62 per unit) Cost of goods sold (@ $43 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 292,000 188,000 304,000 302,000 2,000 Year 2 $ 1,612,000 1,118,000 494,000 332,000 $ 162,000 s *$3 per unit variable: $254.000 fixed each year. The company's $43 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($336,000 + 21,000 units) Absorption costing unit product cost $ 10 12 5 16 $ 43 Production and cost data for the first two years of operations are: Year 2 Units produced Units sold Year 1 21,000 16,000 21,000 26,000 Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.) Year 1 Year 2 Net operating income (loss) Required 1 Required 2 Required 3 Reconcile the absorption costing and the variable costing net operating income figures for each year. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Variable costing net operating income (loss) Year 2 Absorption costing net operating income
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