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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
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 ($44 per unit) Gross margin Selling and administrative expenses Net operating Incone Year 1 $1,134,000 792,000 342,000 303,000 $ 39,000 Year 2 $ 1,764,000 1,232,000 532,000 333,000 $ 199,000 $3 per unit variable: $249,000 fixed each year, The company's $44 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($437,000 23,000 unita) Absorption conting unit product coot 19 $.44 Production and cost data for the first two years of operations are: Unitaoduced 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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