Exercise 3 table:-Variable costing net operating income(loss) year 1_____ year2_____-Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing year1_____ year2____-Absortion costing net operating income year 1_____ year2____

Saved Help During Heaton Company's first two years of operations, it reported absorption costing net operating income as follow Year 1 Year 2 Sales (@ $60 per unit) $ 1, 200, eee $ 1, see, eee Cost of goods sold (@ $35 per unit) zee, eee 1, ese, eee Gross margin 500, eee 750, eee Selling and administrative expenses* 310, eee Net operating income $ 190, eee $ 410, eee * $3 per unit variable; $250,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials $ Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($400,090 + 25,090 units) 16 Absorption costing unit product cost $ 35 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 25,090 25,090 Units sold 20,090 30,000