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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 $ 1,674,000 1,053,000 621,000 335,000 $
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 2 $ 1,674,000 1,053,000 621,000 335,000 $ 286,000 Sales (@$62 per unit) Cost of goods sold (@$39 per unit) Gross margin Selling and administrative expenses* Net operating income $3 per unit variable; $254,000 fixed each year. The company's $39 unit product cost is computed as follows: Direct materials Direct labor Year 1 $ 1,054,000 663,000 391,000 305,000 $ 86,000 Variable manufacturing overhead Fixed manufacturing overhead ($374,000 = 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Year 1 22,000 17,000 Year 2 22,000 27,000 $8 11 3 17 $39 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?
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