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During Heaton Company's first two years of operations, the company reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $62
During Heaton Company's first two years of operations, the company reported absorption costing net operating income as follows:
Year 1 Year 2 Sales (@ $62 per unit) $992,000 $1,612,000 Cost of goods sold (@ $37 per unit) 592,000
962,000
Gross margin 400,000 650,000 Selling and administrative expenses* 302,000 332,000 Net operating income (loss) $98,000
$318,000
*$3 per unit variable; $254,000 fixed each year.
The company's $37 unit product cost is computed as follows:
Direct materials $6 Direct labor 13 Variable manufacturing overhead 4 Fixed manufacturing overhead ($294,000
| During Heaton Company's first two years of operations, the company reported absorption costing net operating income as follows: |
| Year 1 | Year 2 | |
| Sales (@ $62 per unit) | $992,000 | $1,612,000 |
| Cost of goods sold (@ $37 per unit) | 592,000 | 962,000 |
| Gross margin | 400,000 | 650,000 |
| Selling and administrative expenses* | 302,000 | 332,000 |
| Net operating income (loss) | $98,000 | $318,000 |
| | ||
| *$3 per unit variable; $254,000 fixed each year. |
| The company's $37 unit product cost is computed as follows: |
| Direct materials | $6 |
| Direct labor | 13 |
| Variable manufacturing overhead | 4 |
| Fixed manufacturing overhead ($294,000 |
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